January 18, 2023

Wall Street sees big gains ahead in these industrial stocks, even with a recession on the horizon

Posted By: ndeeney

Conventional wisdom says to steer clear of industrial stocks heading into a recession, in anticipation of sputtering economic growth and factory production. But even in the face of a looming downturn this year, Wall Street still expects a host of industrial companies to weather the turmoil, and sees strong gains in the months ahead. XLI YTD mountain The XLI is up more than 2% this year Industrial stocks outperformed last year and continue to fare well in 2023. The Industrial Select Sector SPDR fund (XLI) tracking the sector fell 7.2% last year and is already up more than 2% in 2023. During the fourth quarter, XLI surged 18.6%. Against this backdrop, CNBC Pro searched for stocks in the XLI with at least a 55% buy rating and a potential upside of 15% or more given analysts’ consensus price target. Here are the names that met the criteria: Airline stocks took a hit in 2022 as fuel prices surged and their operating costs rose. At the same time, the sector benefited from a rebound in travel demand as Covid-19 lockdown restrictions eased and borders reopened. Last year, shares of Alaska Air Group , Southwest Airlines and Delta Air Lines lost anywhere from 16% to 21%, but are now seen rebounding at least 24% each, based on consensus price targets. Of the group, Alaska boasts the greatest percentage of analysts rating it a buy (87%). Delta shares could see the greatest upside of the three, with the consensus target implying a 32% potential rally in the shares. This week, Delta reported fourth-quarter earnings that surpassed analysts’ expectations . While strong travel demand persists, Delta said higher labor costs would put a dent in the company’s profit outlook. Shares of Southwest fell Wednesday on news that its pilots union is calling for a vote to authorize a strike , weeks after the airline suffered a holiday meltdown. Auxiliary power equipment maker Generac also made the list, with the average price target suggesting shares stand to gain as much as 20%. Amid last year’s market sell off and a difficult housing market, shares tumbled more than 71%. Aerospace and defense contractor General Dynamics and online car auction company Copart also made the screen, with their consensus price targets implying 16% and 19% upside, respectively.

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