The industrial sector includes companies that produce machinery, equipment, and supplies that are used in construction and manufacturing, as well as those that provide related services. These companies are closely tied to the economy, and their business volume often falls sharply during recessions, though each industrial subsector often performs differently. Well-known companies include Lockheed Martin Corp. (LMT), Honeywell International Inc. (HON), and 3M Co. (MMM). The industrial sector also includes companies that provide air transportation services such as United Airlines Holdings Inc. (UAL).
Industrial stocks, as represented by the Industrial Select Sector SPDR ETF (XLI), have underperformed the broader market, providing investors with a total return of 8.5% compared to the Russell 1000's total return of 19.5% over the past 12 months. These market performance numbers are as of January 15 and the statistics in the tables below are as of January 18.
Here are the top 3 industrial stocks with the best value, the fastest earnings growth, and the most momentum.
Best Value Industrial Stocks
These are the industrial stocks with the lowest 12-month trailing price-to-earnings (P/E) ratio. Because profits can be returned to shareholders in the form of dividends and buybacks, a low P/E ratio shows you’re paying less for each dollar of profit generated.
|Best Value Industrial Stocks|
|Price ($)||Market Cap ($B)||12-Month Trailing P/E Ratio|
|GrafTech International Ltd. (EAF)||10.51||2.8||6.0|
|Air Lease Corp. (AL)||43.28||4.9||8.9|
|Masco Corp. (MAS)||56.09||14.7||10.4|
- GrafTech International Ltd.: GrafTech manufactures graphite and carbon-based products and offers related services. Among the company's products are graphite electrodes, petroleum needle coke, and energy solutions for making steel, silicon metal, electronics, aluminum, and automotive products.
- Air Lease Corp.: Air Lease is involved in the purchase, sale, and leasing of commercial aircraft worldwide. In Q4 2020, Air Lease reported that it had delivered 10 new aircraft from its order book. The company's aircraft investments during the quarter totaled roughly $1.1 billion and its fleet was comprised of 332 owned aircraft and 81 managed aircraft as of December 31.
- Masco Corp.: Masco is a manufacturer and retailer of home improvement and building products. The company sells faucets, cabinets, architectural coating, hardware products, and similar items. Masco products are sold through home centers, hardware stores ,wholesale and retail outlets. In December, the company announced a quarterly dividend of $0.14 per common share, payable on February 8, 2021 to shareholders of record as of January.
Fastest Growing Industrial Stocks
These are the industrial stocks with the highest year-over-year (YOY) earnings per share (EPS) growth for the most recent quarter. Rising earnings show that a company’s business is growing and is generating more money that it can reinvest or return to shareholders.
|Fastest Growing Industrial Stocks|
|Price ($)||Market Cap ($B)||EPS Growth (%)|
|Rockwell Automation Inc. (ROK)||255.60||29.7||3,110|
|AGCO Corp. (AGCO)||114.13||8.5||1,990|
|Verisk Analytics Inc. (VRSK)||190.02||30.9||460.0|
- Rockwell Automation Inc.: Rockwell Automation manufactures industrial automation products including control systems, sensors, motor control devices, and control panels.
- AGCO Corp.: AGCO makes and sells agricultural equipment. The company's products include tractors, combines, sprayers, forage equipment, and replacement parts.
- Verisk Analytics Inc.: Verisk Analytics is a risk assessment and decision analytics company. Verisk provides data, statistical, and actuarial services alongside insurance policy programs, underwriting services, and rating-integrity tools. The company serves clients in the property, casualty, and mortgage fields. For Q3 2020, Verisk reported a 464.7% YOY increase in net income on a 7.7% YOY increase in revenue. Net income was bolstered by strength in its insurance business, a decrease in acquisition-related costs, and a $125 million litigation reserve recorded in Q3 2019. During the quarter, the company said it is engaged in actively investing its cash flow back into high growth, high return on capital opportunities.
Industrial Stocks with the Most Momentum
These are the industrial stocks that had the highest total return over the last 12 months.
|Industrial Stocks with the Most Momentum|
|Price ($)||Market Cap ($B)||12-Month Trailing Total Return (%)|
|Generac Holdings Inc. (GNRC)||252.81||15.9||147.2|
|Axon Enterprise Inc. (AAXN)||150.77||9.6||107.4|
|Virgin Galactic Holdings Inc. (SPCE)||30.43||7.1||105.1|
|Industrial Select Sector SPDR ETF (XLI)||N/A||N/A||8.5|
- Generac Holdings Inc.: Generac Holdings makes automatic, portable, and stationary standby generators for use in commercial, industrial, residential, and telecommunications applications.
- Axon Enterprise Inc.: Axon Enterprise creates and manufactures security systems for law enforcement, military, and self defense applications. The company serves customers around the world. On January 15, the company announced that the Los Angeles Police Department had renewed its 5-year Axon contract and purchased an additional 5,260 TASER 7 energy weapons and 355 Axon Body 3 cameras. With this deal, LAPD has the largest energy weapon deployment in the U.S., with a total of 7,530 TASER 7 energy weapons and 7,355 Axon body cameras.
- Virgin Galactic Holdings Inc.: Virgin Galactic is a holding company that, through subsidiaries, develops missiles, rockets, and other space vehicles. The company serves customers throughout the U.S.
The comments, opinions and analyses expressed herein are for informational purposes only and should not be considered individual investment advice or recommendations to invest in any security or to adopt any investment strategy. While we believe the information provided herein is reliable, we do not warrant its accuracy or completeness. The views and strategies described on our content may not be suitable for all investors. Because market and economic conditions are subject to rapid change, all comments, opinions, and analyses contained within our content are rendered as of the date of the posting and may change without notice. The material is not intended as a complete analysis of every material fact regarding any country, region, market, industry, investment, or strategy.
YCharts. "YCharts." Accessed Jan. 18, 2021.
Air Lease Corp. "Air Lease Corporation Activity Update for the Fourth Quarter of 2020." Accessed Jan. 18, 2021.
Masco Corp. "Masco Corporation Declares Quarterly Dividend." Accessed Jan. 18, 2021.
Verisk Analytics, Inc. "Verisk Reports Third-Quarter 2020 Financial Results," Page 1. Accessed Jan. 18, 2021.
Axon Enterprises Inc. "Los Angeles Police Department Renews Contract With Axon; Becomes Largest TASER 7 Deployment." Accessed Jan. 18, 2021.