The industrial sector is made up of companies that produce and provide services for machinery, equipment, and supplies that are used in construction and manufacturing. Well-known companies in this sector include General Electric Co. (GE), Lockheed Martin Corp. (LMT), and 3M Co. (MMM). The sector also includes companies that provide air transportation services such as American Airlines, Inc. (AAL). The industrial sector, as measured by the Industrial Select Sector SPDR ETF (XLI), has performed roughly in line with the S&P 500 over the past year. XLI posted a 12-month trailing total return of 25.9% versus the S&P's 26.9% based on numbers as of January 7, 2020.
Below, we'll examine the top three stocks in the industrial sector for best value, fastest earnings growth, and most momentum.
Best Value Industrial Stocks
Here are the industrial stocks in the S&P 500 with the lowest 12-month trailing price-to-earnings (P/E) ratio in the sector. 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|
|Johnson Controls International Plc. (JCI)||40.75||31.4||6.3|
|American Airlines Group Inc. (AAL)||27.22||11.9||7.7|
|United Airlines Holdings Inc. (UAL)||86.77||22.0||8.1|
- Johnson Controls International Plc.: Headquartered in Ireland, Johnson Controls is a multinational conglomerate that produces and sells HVAC equipment, building automation, security, fire detection, batteries, and other related products. The company also offers building control systems, energy management, and integrated facility management services. Johnson Controls announced last quarter that CFO Brian Stief would be retiring at the end of 2020. The company said it will begin an external search for a new CFO.
- American Airlines Group Inc.: American Airlines offers services worldwide, including scheduled air transportation services for passengers and cargo. In its Q3 2019 earnings report, American Airlines announced that pre-tax income and net income had each risen by more than 15% year-over-year (YOY).
- United Airlines Holdings Inc.: United Airlines Holdings is a holding company which, through its subsidiaries, offers airline services around the world for both passengers and cargo. In December, United Airlines Holdings announced that CEO Oscar Munoz would transition away from the position in May 2020, with President J. Scott Kirby slated to take over.
Fastest Growing Industrial Stocks
Here are the industrial stocks in the S&P 500 with the highest 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 (%)|
|Flowserve Corp. (FLS)||49.71||6.5||147.6|
|W.W. Grainger Inc. (GWW)||337.84||18.2||133.5|
|Equifax Inc. (EFX)||143.21||17.3||106.2|
- Flowserve Corp.: Flowserve is a designer, manufacturer, distributor, and servicer of industrial flow management equipment. The company offers pumps, valves, and mechanical seals primarily for the refinery and pipeline segments of the petroleum, chemical processing, power generation, and water treatment industries. Flowserve reported an adjusted EPS that increased roughly 20% YOY for the most recent quarter that ended September 30.
- W.W. Grainger Inc.: W.W. Grainger is a distributor of maintenance, repair, and operating products. The company's products include motors, HVAC equipment, lighting, hand and power tools, pumps, and electrical equipment. In Q3 2019, W.W. Grainger reported sales of $2.9 billion, up 4% YOY.
- Equifax Inc.: An information management and transaction processing company, Equifax serves customers in the financial services, telecommunications, and healthcare sectors, among many others. Equifax reported revenue of $875.7 million in Q3 2019, an increase of 5% YOY.
Industrial Stocks with the Most Momentum
These are the industrial stocks in the S&P 500 that had the greatest price change over the past 12 months.
|Industrial Stocks with the Most Momentum|
|Price ($)||Market Cap ($B)||12-Month Trailing Price Change|
|Copart Inc. (CPRT)||93.37||21.7||91.2|
|Global Payments Inc. (GPN)||187.37||56.3||78.6|
|TransDigm Group Inc. (TDG)||587.00||31.4||71.9|
|S&P 500 (SPX)||N/A||N/A||26.9|
|Industrial Select Sector SPDR ETF (XLI)||N/A||N/A||25.9|
- Copart Inc.: Copart is a provider of online auctions and vehicle remarketing services for salvaged vehicles that are primarily sold to licensed dismantlers, rebuilders, and used vehicle dealers. The company reported diluted EPS of $0.91 for its fiscal first quarter of 2020, which amounted to an increase of 93.6% compared to the same period last year.
- Global Payments Inc.: Global Payments is a provider of payment technology services, including electronic transaction processing, information systems, and other related services. The company recently announced earnings for the third quarter, reporting adjusted quarterly EPS of $1.70 and operating margin of 15.7% as compared with 26% a year prior.
- TransDigm Group Inc.: TransDigm Group designs, produces, and supplies engineered aircraft components for use on commercial and military aircraft. The company reported earnings for its fiscal fourth quarter that ended September 30, including an increase of 46.9% in net sales YOY.
Johnson Controls International PLC. "Johnson Controls appoints Brian Stief Vice Chairman and Chief Financial Officer; To Step Down in December 2020," Accessed Jan. 7, 2020.
American Airlines Group, Inc. "American Airlines Group Reports Third-Quarter 2019 Profit," Accessed Jan. 7, 2020.
United Airlines Holdings, Inc. "United Airlines Announces Leadership Transition," Accessed Jan. 7, 2020.
Flowserve Corporation. "Flowserve Corporation Reports Third Quarter 2019 Results," Accessed Jan. 7, 2020.
W.W. Grainger, Inc. "Grainger Reports Results For The 2019 Third Quarter," Accessed Jan. 7, 2020.
Equifax, Inc. "Equifax Releases Third Quarter Results," Accessed Jan. 7, 2020.
Copart, Inc. "Copart Reports First Quarter Fiscal 2020 Financial Results," Accessed Jan. 7, 2020.
Global Payments Inc. "Global Payments Reports Results for Third Quarter 2019 and Increases 2019 Outlook," Page 1. Accessed Jan. 7, 2020.
TransDigm Group Incorporated. "Transdigm Group Reports Fiscal 2019 Fourth Quarter and Year-End Results," Page 1. Accessed Jan. 7, 2020.