15-05-2025
Searching for U.S. industrial stocks outperforming in a market rebound
U.S. industrial stocks outperforming in a market rebound.
The Dow Jones Industrial Average has rebounded strongly since April 22, now trading within 6 per cent of its record high from earlier this year, buoyed by recent gains following positive trade developments and investor optimism. In terms of sector performance, the U.S. industrial sector stands out as the top performer in 2025, with the Industrial Select Sector SPDR Fund (XLI-A) up just over 8 per cent year-to-date, outpacing all other major U.S. sectors, including utilities and financials.
This surge reflects renewed market appetite for cyclical and economically sensitive stocks as confidence returns to the broader market.
Given this backdrop, a quantamental approach, blending quantitative screens with fundamental analysis, can help uncover high-quality industrial stocks that are well positioned to benefit from the sector's momentum and the broader market's upward trend.
Using Trading Central's Strategy Builder, we screened for U.S.-listed industrial stocks with a market capitalization above US$5-billion, focusing our search on the sector's largest and most established companies
To identify companies efficiently utilizing shareholder equity to generate profits, we required a minimum return on equity (ROE) of 10 per cent over the past year, ensuring our screen focused on businesses demonstrating strong financial management.
We added a cap on the company's debt-to-equity ratio at 1 to focus on financial stable businesses with lower risk of financial distress.
Finally, we established a minimum rating of 50 out of 100 using Trading Central's Quantamental rating, which evaluates stocks on a scale of 1 to 100, with 100 indicating the most bullish and 0 the most bearish sentiment. TC Quantamental ranking incorporates a blend of valuation, growth, quality, price momentum and income metrics as essential criteria when assessing a company's ranking.
For informational purposes, we have also included the recent stock price, earnings-per-share growth last quarter compared with the prior year, dividend yield and year-to-date and one-year returns.
Trading Central is a global leader in financial market research and investment analytics for retail online brokers and institutions. Its product suite provides actionable trading ideas based on technical and fundamental research covering stocks, exchange-traded funds, indexes, forex, options and commodities. Strategy Builder, our stock screener is available through leading retail brokers in Canada and worldwide.
Topping our list is Crane Co. CR-N, an industrial products manufacturer known for its robust financial health and impressive growth profile. Crane delivered a remarkable 63.39-per-cent earnings growth last quarter and has returned 17.2 per cent over the past year, reflecting strong price momentum. With a debt-to-equity ratio of just 0.15, the company maintains a conservative balance sheet, making it a compelling choice for investors seeking both stability and upside in the industrials sector.
UL Solutions Inc. ULS-N, a global leader in independent testing, inspection, and certification services, stands out on our list for its exceptional return on equity of 41.07 per cent, the highest on our list, reflecting the company's strong profitability and efficient capital use. The stock is trading near record-highs since releasing their quarterly results back on May 6.
Trane Technologies PLC TT-N, a leader in climate innovation, has the largest market cap on our list at US$93.59-billion. The company delivered 40.53-per-cent earnings growth last quarter. With a debt-to-equity ratio of 0.64, Trane Technologies offers a compelling blend of growth, income and balance sheet strength in the construction and engineering space. The stock posted an all-time high this week.
Trading Central Strategy Builder provides a backtesting capability to evaluate how well an investing strategy would have worked in the past. Using a five-year historical period with quarterly rebalancing, the screen described had a 19-per-cent annualized return compared with 12 per cent for the Dow Jones Industrial Average Index and 15 per cent for the S&P 500 Index.
The investment ideas presented here are for information only. They do not constitute advice or a recommendation by Trading Central in respect of the investment in financial instruments. Investors should conduct further research before investing.
Gary Christie is head of North American research at Trading Central in Ottawa.
