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Quarter-End Insights

Outside of Aerospace and Defense, Few Undervalued Industrials Stocks

Incoming administration could be a boon for infrastructure spending.

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The Morningstar US Industrials Index rebounded sharply during the fourth quarter, led by construction, industrial distribution, and farm and heavy construction machinery, as investors bet that COVID-19 vaccines and the incoming Biden administration would usher in increased infrastructure spending and a sustained economic recovery. Furthermore, U.S. industrial production continued to rebound, which buoyed investor confidence in the sector. Still, the industrials index has underperformed year to date, primarily due to aerospace and defense laggards. The market has punished stocks with exposure to commercial aerospace, which is still struggling mightily amid the pandemic.

Despite sharp rally, industrials have underperformed year to date - Morningstar

Brian Bernard does not own (actual or beneficial) shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.