The industrials sector has delivered strong performance this year. Globally, the MSCI World Industrials Sector Index has surged by 15%, almost double the 7.6% gain of the MSCI All-Country World Investable Market Index, as of June 16. Closer to the domestic market, the S&P 500 Industrials Sector Index is up 8.7%, compared to a 2.6% increase in the broader S&P 500.
This outperformance has caught the attention of market experts, including J.P. Morgan’s senior analyst Stephen Tusa, who recently discussed the sector’s outlook in a mid-May interview with CNBC. Despite only modest growth in group earnings, Tusa noted that industrials have emerged as the top-performing industry year to date.
Tusa noted that while the sector is up in 2025, corporate earnings estimates have been revised down by 2–3%. The sector’s valuation has expanded back to its historical premium relative to the broader market, largely driven by multiple expansion rather than fundamental growth. He expects that some of the recent revisions may be reversed, with upcoming data likely to push earnings estimates higher again.
One key theme, according to the analyst, is pricing power. Industrial companies now seem to be much more aggressive and confident about price increases- somewhat like what they did during COVID-19-era supply chain disruption and inflationary environment. Some companies even implemented price increases before the tariffs actually came into force, demonstrating a proactive approach to margin protection. If input costs fall, those price increases could result in margin gains rather than being rolled back. Tusa believes roughly 75% of those increases are structural rather than temporary surcharges, which could fade depending on competition but won’t significantly erode profitability for value-added capital goods firms.
The analyst laid emphasis on the fact that demand stays the prime variable to be observed. According to the analyst, a good number of companies are expecting slight declines in volumes but are confident that they can be made up for through good prices. Far greater uncertainty would be how demand at the end market will behave through changes in tariff policies and macro-volatility.
Regarding capital expenditure (CapEx) trends, Tusa noted that despite recent volatility, most companies have maintained their spending plans steady. CapEx budgets across roughly $1 trillion in industries they tracked remain mostly unchanged, with some upside in data center and utility investments, and minor pullbacks in oil, gas, and chemicals.
With those insights, let’s explore the 10 most undervalued industrial stocks to buy according to analysts.
A technician inside a production line operating sophisticated machinery and components produced by a company.
Our Methodology
To identify the most undervalued opportunities within the U.S. industrial sector, we began by screening industrial companies with a market capitalization exceeding $2 billion. From this pool, we selected stocks trading at a forward price-to-earnings (P/E) ratio of 15 or lower and offering a potential upside of at least 20%, based on analyst price targets. We then ranked the top 10 qualifying stocks in ascending order of their potential upside. To provide additional insight into institutional investor interest, we also included hedge fund sentiment data using Insider Monkey’s Q1 2025 hedge fund holdings database.
Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 373.4% since May 2014, beating its benchmark by 218 percentage points (see more details here).
Note: All pricing data is as of market close on June 16.
10 Most Undervalued Industrial Stocks to Buy According to Analysts
10. FedEx Corp. (NYSE:FDX)
Forward PE: 11.6
Potential Upside: 21%
Number of Hedge Fund Holders: 62
FedEx Corp. (NYSE:FDX) is one of the 10 most undervalued industrial stocks to buy according to analysts. A weaker industrial economy has impacted FedEx’s growth, and the company had to lower its profit guidance early in the year due to higher-than-expected inflation and softening demand. Since its last earnings report in March, little has improved on that front, and the stock has reflected this weakness, falling 19.4% year-to-date.
However, Citi analyst Ariel Rosa remains constructive on the name. Rosa, in a note dated June 18, reiterated a Buy rating on the stock, with an unchanged $267 price target. She highlighted a series of strategic changes intended to strengthen its long-term position, which serves as the basis for her optimistic view. Her rating also reflects confidence in FedEx’s ability to improve efficiency and earnings despite near-term challenges.
The company is moving forward with its Network 2.0 plan, integrating its Express and Ground units to streamline operations. It is also preparing to spin off its Freight business, a move seen as unlocking more focused growth potential and value from this business.
In addition, FedEx continues to benefit from its DRIVE cost-cutting program, which has already delivered notable savings and is expected to support margin improvement over time. While the demand backdrop remains uncertain, especially with global trade slowing, Rosa believes FedEx’s restructuring efforts and leadership changes could pay off in the longer term.
FedEx Corp. delivers packages and freight to multiple countries and territories through an integrated global network. The Company provides worldwide express and freight delivery, ground small-parcels, less-than-truckload, supply chain management, customs brokerage services, trade facilitation, and electronic commerce solutions.
9. Delta Air Lines Inc. (NYSE:DAL)
Forward PE: 9.1
Potential Upside: 21%
Number of Hedge Fund Holders: 67
Delta Air Lines Inc. (NYSE:DAL) is one of the 10 most undervalued industrial stocks to buy according to analysts. On June 18, Bernstein analyst David Vernon revised his near-term view on Delta Air Lines, trimming the price target slightly to $60 from $61 while maintaining an Outperform rating.
The analyst’s downward adjustment to the target price reflect his latest hike in fuel cost estimates. He attributes the rise to the growing geopolitical risks and the on-going tensions between Iran and Israel. The analyst notes that while airlines can typically pass fuel costs onto consumers through higher fares, in such scenarios, the pricing power weakens, especially if geopolitical concerns hit traveler sentiment. Thus, it becomes difficult for companies to pass on the costs to consumers during supply-driven price shocks.
Bernstein also notes that the continued uncertainty in the Middle East could dampen demand during the summer travel period which is important for the sector. This adds another layer of complexity to forecasting near-term performance, prompting a more cautious stance in earnings estimates.
Despite these pressures, Vernon’s overall rating remains positive, suggesting confidence in Delta’s longer-term positioning and operational strength even as short-term headwinds persist.
Delta Air Lines Inc. provides scheduled air transportation for passengers, freight, and mail over a network of routes.
8. Owens Corning (NYSE:OC)
Forward PE: 10.2
Potential Upside: 22%
Number of Hedge Fund Holders: 50
Owens Corning (NYSE:OC) is one of the 10 most undervalued industrial stocks to buy according to analysts. The company is driving growth by focusing on manufacturing long-term, sustainable building products through material innovation. Over the past five years, the company has grown its revenue at a compounded annual growth rate (CAGR) of approximately 9%.
The company also boasts an above peers-average adjusted EBITDA margin (reached ~25% by FY 2024), which has enabled it to generate free cash flows of over $1.1 billion over the last four years.
The management is also positioning the company for substantial growth over the next 3-4 years, as it plans to achieve $12.5 billion in revenue by 2028 (versus $10.6 billion in FY 2024), while maintaining a mid-20% adjusted EBITDA margin.
Corroborating a positive outlook for the company, Wells Fargo analyst Sam Reid reiterated a Buy rating on Owens Corning on June 10 with an unchanged price target of $160. In mid-May, Reid had raised his price target on the shares, from $150 to $160, encouraged by the company’s clear financial goals through 2028, which aim to achieve revenue growth primarily through higher volumes and selective price increases. The analyst appreciated the company’s disciplined cost control and stable profitability, as well as its target to maintain strong EBITDA margins in both Roofing and Insulation.
Reid also believed that growing housing demand, ongoing contractor partnerships, and recent investments in insulation capacity support the company’s outlook. While some investors remain cautious, Reid believes the company’s current valuation and strategic direction make a strong case for long-term upside, supporting the Buy rating.
Owens Corning (NYSE:OC) is a global provider of residential and commercial building products.
7. ABM Industries Inc. (NYSE:ABM)
Forward PE: 11.5
Potential Upside: 23%
Number of Hedge Fund Holders: 20
ABM Industries Inc. (NYSE:ABM) is one of the 10 most undervalued industrial stocks to buy according to analysts. On June 9, a UBS analyst upgraded ABM Industries to Buy from Neutral and raised its price target to $54 from $50.
His decision came despite the stock dropping 9% after Q2 results and unchanged full-year guidance. The analyst called the challenges temporary and believes that the decline was likely an overreaction.
The analyst highlighted that ABM’s largest segment has returned to positive growth, which marked a meaningful shift in the overall outlook. He also points to the improvement in fundamentals and signs of stabilization and recovery which the business has been exhibiting. As the stock is now trading at a lower level, he believes that the current weakness presents a buying opportunity.
ABM Industries Inc. (NYSE:ABM) provides facility, engineering, and infrastructure solutions, including air conditioning, janitorial, lighting, parking, security, and other outsourced facility services to commercial, industrial, and institutional customers.
6. United Airlines Holdings Inc. (NASDAQ:UAL)
Forward PE: 7.6
Potential Upside: 24%
Number of Hedge Fund Holders: 67
United Airlines Holdings Inc. (NASDAQ:UAL) is one of the 10 most undervalued industrial stocks to buy according to analysts. The airline industry has been on the receiving end throughout this year, and United Airlines has been no exception, with a 19% decline in share prices. However, this comes on the back of a strong 135% appreciation in 2024.
Following the Iran-Israel military conflict, on June 18, David Vernon from Bernstein marginally lowered his price target ($105 from $104) but maintained an Outperform rating on UAL. The analyst is factoring in a higher fuel price and risks due to the escalation, which has led him to lower his estimates and price target. He also believes that it will be difficult for the airline to pass on the cost to the consumers. Moreover, he also believes that the escalation will likely impact the summer travel season.
While it is well understood that the airline business is typically volatile, this year has presented several challenges, including heightened safety concerns following some crashes and incidents, fallout from the global trade war, immigration concerns in the US, and macroeconomic uncertainties.
All these issues made the operating conditions challenging for the airlines so much so that United Airline had to issue two profit outlooks in April – adjusted EPS were guided at $11.50 to $13.50 this year if the current environment remains stable; or it can go down to as much as $7 if the US economy enters a recession.
In late May, UAL announced a partnership with JetBlue Airways (NASDAQ: JBLU) called ‘Blue Sky’, which reflects the company’s proactive effort to address ongoing challenges. Following that, an analyst from UBS called the agreement as a positive step for both airlines, as he sees ample synergies between their networks. As the deal doesn’t involve any code sharing, joint capacity planning, or revenue sharing, the analyst also sees minimal regulatory issues.
United Airlines Holdings Inc., through its subsidiaries, owns and operates airlines that transport people and cargo throughout North America and to destinations worldwide.
5. Alaska Air Group Inc. (NYSE:ALK)
Forward PE: 14.4
Potential Upside: 25%
Number of Hedge Fund Holders: 56
Alaska Air Group Inc. (NYSE:ALK) is one of the 10 most undervalued industrial stocks to buy according to analysts. On June 4, Morgan Stanley’s Ravi Shanker reiterated a Buy rating on Alaska Air, while slightly lowering the price target to $83 from $85, still implying meaningful upside of over 75%.
The focus of Ravi’s update was Alaska’s strategic move into Europe, starting with a new Seattle-to-Rome route. In line with the management’s discussion at the last investor day, the street was expecting the company’s initial focus to be primarily on Asian destinations, with a European expansion coming at a much later period. Therefore, this expansion comes earlier than expected, which signals management’s intent to accelerate international growth.
Additionally, Rome was a top request from Mileage Plan members, and thus this underscores the airline’s customer-driven approach.
The analyst also sees this route as a key milestone in positioning Seattle as a major international hub. With plans to roll out new destinations each year and the potential upside from its pending integration with Hawaiian Airlines, Alaska remains Morgan Stanley’s preferred pick in the sector.
The analyst believes the transatlantic market currently offers better fundamentals than transpacific routes, making this a timely move for the airline.
Alaska Air Group Inc. is the fifth-largest airline company in the United States, operating three airlines: Alaska Airlines, Hawaiian Airlines, and Horizon Air.
4. Flowserve Corp. (NYSE:FLS)
Forward PE: 14.2
Potential Upside: 27%
Number of Hedge Fund Holders: 55
Flowserve Corp. (NYSE:FLS) is one of the 10 most undervalued industrial stocks to buy according to analysts. On June 10, Bank of America analyst Andrew Obin reiterated a Buy rating on Flowserve with an unchanged price target of $60. His view is primarily supported by the strategic merger with Chart Industries, which Obin sees as a transformative move.
The combined company is expected to benefit from increased scale, stronger positioning in LNG, renewable energy, and nuclear markets, as well as greater revenue diversification. He also pointed out that the combined business should reduce reliance on any single revenue stream.
The deal is projected to be significantly accretive to earnings by FY29, supported by both cost and revenue synergies. Management has outlined projected cost savings of $300 million and anticipates a modest 2% boost in revenue post-integration, with benefits expected by fiscal year 2029. These gains are expected to come from areas such as procurement efficiencies, reduced corporate overhead, and operational improvements.
According to Obin, while integration challenges exist, the strategic reasoning and potential benefits from synergies offer solid grounds for staying optimistic about the stock.
Flowserve Corp. (NYSE:FLS) manufactures and provides aftermarket services for flow control systems. It develops and manufactures precision-engineered flow control equipment integral to the movement, control, and protection of the flow of materials in customers’ critical processes.
3. Chart Industries Inc. (NYSE:GTLS)
Forward PE: 12.2
Potential Upside: 40%
Number of Hedge Fund Holders: 50
Chart Industries Inc. (NYSE:GTLS) is one of the 10 most undervalued industrial stocks to buy according to analysts. On June 4, UBS analyst Manav Gupta maintained a Buy rating on Chart Industries today and set a price target of $225, implying a 40% potential upside.
The analyst’s affirmation follows the announcement of the all-stock merger agreement between Chart Industries and Flowserve, which will form a new industrial player valued at around $19 billion. The deal is expected to close by the end of Q4 2025, pending shareholder and regulatory approvals.
The merger brings together Flowserve’s flow control capabilities and Chart’s process technology expertise, forming a diversified business spanning energy, water, industrial gases, chemicals, and data centers. The combined company will have a presence in more than 50 countries.
The deal is expected to yield $300 million in cost synergies over the next three years and contribute to adjusted earnings per share (EPS) within the first year. The company will also maintain Flowserve’s existing dividend policy.
A June 4 Bloomberg report noted that the two companies view the merger as a means to navigate demand cycles better and serve a broader customer base. However, the report points out that mergers of this size don’t happen often, mainly because they can be difficult to pull off, whether due to cultural differences, challenges in combining operations, or unclear strategic fit. The deal’s success will depend largely on how well it’s executed.
Chart Industries Inc. (NYSE:GTLS) is a global leader in the design, engineering, and manufacturing of process technologies and equipment used across the gas and liquid molecule supply chain. Its solutions support the production, storage, distribution, and end-use of atmospheric, hydrocarbon, and industrial gases, serving industries such as energy, industrial gas, and medical.
2. Herc Holdings Inc. (NYSE:HRI)
Forward PE: 11.6
Potential Upside: 42%
Number of Hedge Fund Holders: 33
Herc Holdings Inc. (NYSE:HRI) is one of the 10 most undervalued industrial stocks to buy according to analysts. On June 2, 2025, Herc completed its acquisition of H&E Equipment Services, a transaction that significantly strengthens its position in the equipment rental industry.
Initially proposed in February, the deal offered H&E shareholders $78.75 in cash and 0.1287 shares of Herc stock per H&E share, valuing the offer at $104.89, and representing a 14% premium over a competing bid from United Rentals. H&E’s board ultimately backed Herc’s proposal, and following the completion, its shareholders now hold roughly 14% of the combined company.
The acquisition adds scale and reach to Herc’s operations, positioning it in 11 of the top 20 U.S. rental markets. It also broadens its fleet, strengthens its specialty and general equipment offerings, and brings in a skilled workforce aligned with Herc’s customer-focused culture. CEO Larry Silber noted that the deal sets the stage for accelerated growth and stronger long-term value creation.
Reflecting confidence in Herc’s outlook, Barclays analyst Adam Seiden reiterated a Buy rating on the stock on June 10, maintaining a $160 price target, among the highest on the street.
Herc Holdings Inc., which operates through its Herc Rentals Inc. subsidiary, is a full-line rental supplier with a fleet that includes aerial, earthmoving, material handling, trucks and trailers, air compressors, compaction, and lighting equipment.
1. The Brink’s Company (NYSE:BCO)
Forward PE: 11.3
Potential Upside: 47%
Number of Hedge Fund Holders: 30
The Brink’s Company (NYSE:BCO) is one of the 10 most undervalued industrial stocks to buy according to analysts. The Company (NYSE:BCO) has recently taken two significant steps that reinforce its long-term strategic focus on transforming ATM managed services and modernizing cash operations. These developments reflect Brink’s efforts to expand its global reach through technology and collaboration.
On June 12, Brink’s announced a strategic investment in KAL ATM Software, a company known for its hardware-independent ATM software. The investment supports Brink’s broader plan to scale its ATM Managed Services (AMS) by helping banks and financial institutions manage diverse ATM fleets while delivering a consistent user experience. Brink’s and KAL have already worked together on projects in Asia, the UK, and the Middle East. This investment is expected to deepen that partnership. According to Brink’s CEO, Mark Eubanks, the partnership reinforces Brink’s goal of delivering flexible, interoperable solutions that prioritize customer choice, which is critical in an increasingly digital environment.
A few days earlier, Brink’s launched a joint venture with Meedaf, a financial services firm licensed in the Abu Dhabi Global Market (ADGM). This partnership aims to upgrade ATM and cash services across the UAE and broader GCC region. Combining Brink’s global technology and operational strengths with Meedaf’s regional expertise, the joint venture will offer fully integrated solutions, ranging from cash-in-transit and money processing to advanced digital retail solutions, such as deposit machines and kiosks.
Together, these moves show Brink’s commitment to expanding its AMS platform while reinforcing its focus on innovation, execution, and regional growth.
The Brink’s Company (NYSE:BCO) provides cash and valuables management, digital retail solutions, and ATM managed services.
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