The Dow Jones Industrial Average reached a record high this week, breaking above a range that was in place since late February. In terms of U.S. sector strength, the Industrial Select Sector SPDR Fund ETF (XLI) has increased by approximately 3.23 per cent over the past week, emerging as the top-performing sector, closely followed by the consumer discretionary and financial sectors. Given this momentum, we decided to explore U.S. industrial stocks that appear compelling from quantitative, trend-following and earnings-growth perspectives.
Utilizing Trading Central Strategy Builder, we began our search for U.S. industrial stocks by concentrating on companies with a market capitalization exceeding US$5-billion. This criterion aimed to narrow down our results to include only the largest and most established stocks within the sector.
In order to prioritize well-valued companies, we’ve opted to consider only those with price-to-earnings ratios of 24 or less. It’s worth noting that the average P/E ratio of companies listed in the Dow Jones stands at approximately 24.41.
We screened for U.S industrial stocks that had EPS growth of at least 10 per cent last quarter compared with the same quarter a year ago in order to identify companies with strong profitability trends and promising growth potential.
To identify companies efficiently utilizing shareholder equity to generate profits, we sought a minimum return on equity (ROE) of 10 per cent over the past year, reflecting sound financial management and promising investment prospects.
Finally, we established a minimum rating of 55 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 1 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, year-to-date and one-year return.
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.
