The industrial sector has been one of Wall Street's stronger performers in 2026, with the State Street Industrial Select Sector SPDR ETF (XLI) gaining 14.5% year to date as of July 29. Investors have favored industrial companies as demand for infrastructure development, defense equipment, aerospace, electrical systems and factory automation remained resilient despite an uncertain macroeconomic backdrop. Companies tied to artificial intelligence (AI) infrastructure also benefited as rising investment in data centers boosted demand for electrical equipment, power management systems and industrial machinery. Crown Holdings, Inc. CCK, RTX Corporation RTX and Kaiser Aluminum Corporation KALU are three stocks that have benefited.
Economic Data Reinforces Manufacturing Trends
Economic releases throughout the year have been painting a gradually improving picture for U.S. manufacturing. The Institute for Supply Management's (“ISM”) Manufacturing PMI has spent the last 20 months above the 50-point expansion threshold, indicating continued strength in factory activity. The Manufacturing PMI registered 53.3 percent in June, 0.7 percentage point lower than in May. S&P Global's Manufacturing PMI has also remained in expansion territory for much of 2026, signaling that manufacturing conditions are stabilizing. Durable goods orders generally demonstrated resilience, supported by healthy demand for commercial aircraft, defense products and capital equipment, even as higher interest rates weighed on some business investment.
Long-Term Themes Continue to Support the Sector
Beyond the monthly economic data, investors remained focused on long-term growth drivers. Federal infrastructure spending, manufacturing reshoring initiatives and increased investment in domestic production facilities continued to create opportunities across industrial businesses. Rising defense spending amid ongoing geopolitical tensions further strengthened aerospace and defense companies, while the expansion of AI-related infrastructure generated robust demand for electrical components, engineering services and industrial automation.
Our Choices
The stocks below flaunt a Zacks Rank #1 (Strong Buy) or Rank #2 (Buy). The search was also narrowed down with a VGM Score of A or B. Here, V stands for Value, G for Growth and M for Momentum. The score is a weighted combination of these three metrics. Such a score allows you to eliminate the negative aspects of stocks and select winners. You can see the complete list of today’s Zacks #1 Rank stocks here.
Crown Holdings manufactures beverage, food and aerosol packaging, closures, bottles and transit packaging solutions. The company also provides industrial packaging equipment and protective products, serving beverage, food, personal care, household and industrial markets worldwide. CCK’s expected earnings growth rate for the current year is 7.7%. The Zacks Consensus Estimate for its current-year earnings has improved 4.2% over the past 60 days. This Zacks Rank #2 company has a VGM Score of A.
RTX is an aerospace and defense company providing aircraft engines, avionics, aerospace systems, missile defense, sensors and military technologies. It serves commercial, defense and government customers worldwide. RTX’s expected earnings growth rate for the current year is 14%. The Zacks Consensus Estimate for its current-year earnings has increased 3.8% over the past 60 days. This Zacks Rank #2 company has a VGM Score of B.
Kaiser Aluminum produces specialty aluminum products for aerospace, automotive, packaging and industrial applications. KALU’s expected earnings growth rate for the current year is 51.2%. The Zacks Consensus Estimate for its current-year earnings has increased 5% over the past 60 days. This Zacks Rank #1 company has a VGM Score of A.
Bottom Line
Although concerns over tariffs, global trade and manufacturing activity periodically created volatility, the industrial sector's earnings resilience and exposure to structural growth trends have enabled it to outperform the broader market in 2026, making it one of Wall Street's standout sectors so far this year.
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Crown Holdings, Inc. (CCK): Free Stock Analysis Report
Kaiser Aluminum Corporation (KALU): Free Stock Analysis Report
RTX Corporation (RTX): Free Stock Analysis Report
This article originally published on Zacks Investment Research (zacks.com).