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Industrials as a whole comprises all companies who are involved in aerospace and defense, construction, engineering, production, distribution, or maintenance of capital goods.

Investment opportunities within the industrials sub sector are companies with large competitive moats and low valuations such as Boeing and Deere. The aerospace and defense subsector of industrials is dominated by Boeing, Lockheed, and Raytheon and the construction subsector is dominated by Caterpillar and Deere. Other notable industrials’ stalwarts are Nucor which produces steel, and GE which is an industrial conglomerate in multiple subsectors. Ultimately, due to significant barriers to entry and a diverse array of niches within the industrials sector, subsectors’ of industrials are dominated by a smorgasbord of oligopolies. Macroeconomic conditions such as negative real-interest rates and a China trade-deal, coupled with historically low valuations makes investing in industrials sensible given relative predictability and stability of other factors affecting industrials’ performance.

Industry Drivers


Despite the pandemic, the Industrial Production Index is expected to ultimately experience growth over the five years till 2026. It is expected to grow at an annualised rate of 1.1% with a growth rate of around 0.1% in 2021. Ultimately, rises in the industrial production index directly lifts the tide of industrials companies by increasing top and bottom line growth as it creates a need for new equipment investment, repairs, and equipment replacement


There is a near 2% expected annualized growth of the sector as a whole over the coming years. This is partly due to the downstream growth potential as a result of recovering of oil and gas exploration industry from rising oil prices is expected to be a source of growth in the industrials sector

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