While other sectors show signs of slowing corporate profits, industrials – despite the fallout from the ongoing trade war between Washington and Beijing – continue to grow profits at a faster pace than the market. FactSet data points to the industrials sector growing earnings at 8.4% in 2019 – above the projected 3.8% growth rate for the average S&P 500 company.
“Industrials are at least showing above-average growth,” John Davi, chief investment officer at Astoria Portfolio Advisors, told CNBC earlier this year. “We're living in a world where growth is declining. S&P 500 earnings are de-accelerating, so if you can get stocks that have above-average growth to the S&P, then that's really attractive,” Davi added.
The industrials sector continues to be one of the best performing sectors in the S&P 500 index. Year to date (YTD), industrials have outpaced the broader market by about 3% as of July 1, 2019. Stocks in the space may get an additional boost this week on news that President Trump and his Chinese counterpart Xi Jinping agreed on Saturday at the Group of 20 (G-20) summit in Osaka, Japan, to restart trade talks and hold off on imposing new tariffs.
Those who follow the sector should add these three stocks to their watchlist. Each is projected to post robust full-year 2019 earnings growth and trades at, or near, an all-time high. Let's take a close look at each issue and work through several trading ideas.