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Quarter-End Insights

Industrials: Worldwide Growth Is Resilient, But Valuations Look Full

Despite a general premium to our fair value estimates in the sector, we still see several opportunities for investors.

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  • Industrial stocks were about 7% overvalued at the end of June, and this ratio has slightly declined, with a market price/fair value estimate ratio at 1.04 for our sector coverage. Despite this premium to our fair value estimates, we still believe that there are several opportunities for investors, including General Motors, Fluor, and Anixter.
  • Worldwide growth shows signs of resilience despite nearly a decade of expansion since the Great Recession. We believe this resilience, especially excluding North America, is likely to continue, as several of our companies announced higher growth rates in their international segments relative to their North American segments.   
  • Despite geopolitical turmoil and hurricanes, we see interesting trends across our industrial universe in the agricultural equipment, automobiles, and diversified industrial segments.

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Nick Mokha does not own shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.