UBS names 11 top industrial sector stocks with a "buy" recommendation

UBS analysts singled out 11 industrial companies, calling them "the most interesting investment ideas with a "buy" recommendation," writes Business Insider. The publication considers the industrial sector an undervalued part of the market and points out that it is showing a fantastic year, adding 15.2% since January and thus outpacing the growth of the S&P 500 index.

It is noteworthy that the UBS list includes securities, on which its opinion differs from the market or the investment bank has "interesting or exclusive data", confirming the recommendation to buy.

- Woodward is a manufacturer of control systems and components for the aerospace and energy industries. According to UBS, this company is in a strong position due to margin expansion, an expected doubling of free cash flow, and continued growth in the industrial segment. The bank's 2026 revenue, EBITDA and free cash flow forecasts are 3%, 6% and 11% above the Wall Street consensus.

Since the beginning of the year, Woodward shares have risen by 44%. The opinions of analysts on this company are divided: recommendations to buy only one more than neutral, follows from the data of MarketWatch.

- Alaska Air Group. UBS' confidence in its long-term potential is bolstered by an increase in premium seat share from 27% to 29%, the development of a loyalty program and global expansion, the analysts explained. "We also believe near-term risks to Alaska Air Group are mitigated by accelerating corporate demand and weakening competition in San Francisco and other markets," they wrote.

Since the beginning of the year, the company's value has fallen by more than 11%. Wall Street is almost unanimous: the carrier's securities have 16 "buy" tips out of 17.

- Railroad operator CSX Corporation. According to analysts, it is expected to show earnings per share growth in 2025-2026. Downside risk is limited given weaker market expectations for M&A deals in the industry and the low P/E multiple of these securities: it is 17, while the five-year average is 18, UBS points out. "The completion of two large and complex construction projects will allow CSX to reduce approximately $100 million in operating expenses in 2026, while improving network resiliency and adding new capacity for growth," the analysts wrote.

Since the beginning of the year quotations of the company grew by 3.6%. 19 Wall Street analysts suggest buying this stock, the remaining 10 recommend holding it in the portfolio.

- TE Connectivity is a Swiss manufacturer of electronic components and solutions for industry, transportation and communications. UBS analysts noted three optimistic factors: TE Connectivity's significant participation in the growth of the AI sector, which may reach annual turnover of over $1 billion by the end of the year, signs of stabilization in the Industrial Solutions division and diversification of the business by entering new segments - from cloud data centers and energy to automation solutions.

Since the beginning of the year, the company's securities have grown by 52%. 15 out of 22 analysts advise to buy them, six - to hold and one - to sell.

- Comfort Systems USA is a provider of HVAC installation and maintenance services. According to UBS, the company records steady demand for projects to equip data centers and industrial facilities with HVAC systems. The growing number of such orders is contributing to revenue growth, while a shortage of skilled labor in the industry is keeping profit margins higher.

The company's shares have risen 88.5% since the beginning of the year. Seven out of ten Wall Street analysts are also positive about these securities and advise to buy them. The rest suggest holding them in the portfolio.

- DuPont is a producer of materials for industry, electronics and biotechnology. As UBS notes, the company has key events coming up in the next two months: it has to complete its business separation - which is scheduled for Nov. 1 - as well as make a presentation on the new NewCo structure being spun off from DuPont. "This should push the stock upward as investors get a clearer picture of the revamped RemainCoportfolio (the part of DuPont that will remain after the separation - OnInvest)," the analysts wrote.

Since the beginning of the year, the company's shares have added 2.4%. 17 out of 19 analysts advise to buy them, the rest - to hold.

- Johnson Controls International is a manufacturer of heating, ventilation, air conditioning and building security systems. UBS expects earnings growth for this company and a revaluation of its stock multiples. "We estimate the potential for earnings growth of up to 60% over fiscal years 2025-2028, driven by structural internal improvements, margin recovery and significant shareholder payouts," the analysts said.

Quotes of Johnson Controls International since the beginning of the year jumped by 37.4%. The opinions of analysts on this company are divided: 12 advise to buy securities of this company, 10 - to hold. There is also one recommendation to sell.

- Advanced Drainage Systems is a manufacturer of drainage pipes and drainage systems. UBS analysts see the company as one of the key investment opportunities in the building materials sector. According to their forecasts, the sales recovery will be supported by the shift to thermoplastics, and the Allied Products and Infiltrator divisions will provide additional growth. The bank's model for 2027 includes 8% revenue growth for the company versus the consensus of 5.7%.

Since the beginning of the year, Advanced Drainage's market value is up 25%. Nine out of ten analysts advise buying this stock, one advises holding.

- Quanta Services is a contractor in energy infrastructure and communications network construction. UBS forecasts that the average annual growth of the company's earnings per share will amount to 13% in 2024-2029. The main sources will be investments in power grid and renewable energy, with telecom and underground infrastructure projects providing additional contribution in the future. "Strong cash flow will allow the company to continue share buybacks and M&A deals, which will also contribute to growth," the analysts said.

The company's shares have added 23.6% this year. Half of analysts - 17 out of 34 - advise to buy its shares. 16 recommend holding and only one recommends selling.

- Sealed Air Corp is a manufacturer of packaging materials and solutions for the food processing and logistics industries. UBS named the company a top pick in the paper and packaging sector. The bank expects the decline in sales to slow by the end of 2025 or early 2026, after which revenue will start growing at 1.6% YoY (versus a 1.6% decline in 2025).

The stock has gained 1.6% since the beginning of the year. 12 analysts advise to buy them, seven - to hold.

- Zebra Technologies is a manufacturer of barcode scanners, data collection terminals and logistics automation solutions. "We believe Zebra Technologies' results in the second half of 2025 and the expected acceleration in demand in 2026 will be growth drivers following the stock's correction in the second quarter," the investment bank analysts wrote. They forecast that earnings per share estimates for 2026 will be revised upward. UBS believes that this will be facilitated by exceeding expectations for margins in the second half of the year. An additional factor will be accounting for the effect of the deal with Elo - a manufacturer of touch screens and interactive displays. Analysts also note a significant potential for sales growth in the fourth quarter, if by November the situation with duties will be clarified.

Zebra shares are down 16.4% YTD. 11 out of 19 analysts advise buying them, eight advise holding.

This article was AI-translated and verified by a human editor