MW 10 stocks in this year's strongest sector expected to grow fastest through 2027
By Philip van Doorn
This sector has outperformed in 2025, and it held up well during the brutal broad decline of 2022
Let's begin with a table that might surprise you - here is how the 11 sectors of the S&P 500 have been performing, with dividends reinvested:
Sector or index 2025 return 2024 return 2023 return 2022 return Return since end of 2021
Industrials 9.5% 17.5% 18.1% -5.5% 43.7%
Consumer staples 7.9% 14.9% 0.5% -0.6% 23.8%
Utilities 7.8% 23.4% -7.1% 1.6% 25.5%
Materials 5.6% 0.0% 12.5% -12.3% 4.3%
Financials 5.5% 30.6% 12.1% -10.5% 38.3%
Communication services 4.9% 40.2% 55.8% -39.9% 37.7%
Real estate 3.4% 5.2% 12.4% -26.1% -9.7%
Information technology 1.0% 36.6% 57.8% -28.2% 56.4%
Healthcare -2.7% 2.6% 2.1% -2.0% -0.1%
Energy -3.5% 5.7% -1.3% 65.7% 66.8%
Consumer discretionary -5.7% 30.1% 42.4% -37.0% 10.0%
S&P 500 2.1% 25.0% 26.3% -18.1% 32.0%
Source: FactSet
You might need to scroll the table to see all of the data.
The sectors are sorted by this year's performance. The full S&P 500 SPX is included at the bottom of the table. We have gone further back with the performance data to show how the sectors and the full index have performed through the pattern that included a broad decline in 2022, strong rallies in 2023 and 2024, and this year's volatility brought about in part by President Donald Trump's fluctuating trade and tariff policies.
The industrial sector has been the best performer in the S&P 500 this year. It has also outperformed the index for the full period since the end of 2021, for the third-best performance behind the energy and information technology sectors. The industrial sector underperformed the full index during 2023 and 2024, but it held up much better than the index did during the down year of 2022.
Now let's look at the sectors again, this time sorting by projected compound annual growth rates for revenue. The projections are based on consensus estimates among analysts polled by FactSet, weighted by companies' market capitalization:
Sector or index Estimated revenue CAGR from 2025 through 2027 Estimated EPS CAGR from 2025 through 2027 Forward P/E
Industrials 8.2% 15.7% 23.9
Communication services 6.5% 11.1% 19.1
Real estate 6.4% 6.8% 18.0
Healthcare 6.1% 11.0% 16.3
Consumer discretionary 5.6% 14.5% 28.5
Information technology 5.4% 14.0% 27.7
Financials 5.3% 12.5% 16.5
Utilities 4.8% 8.1% 17.8
Materials 4.3% 15.1% 20.5
Energy 4.0% 19.0% 14.6
Consumer staples 0.8% 7.5% 23.3
S&P 500 5.5% 12.9% 21.6
Source: FactSet
The industrial sector is at the top again, with the highest projected revenue CAGR from 2025 through 2025. The table also includes projected CAGR for earnings per share and weighted forward price-to-earnings ratios for the sectors and the full S&P 500. The industrial sector has the second highest expected EPS CAGR, after the energy sector.
The industrial sector's forward P/E ratio is higher than that of the full index, but the premium may be warranted by the higher expected growth rates.
There are easy ways to invest in all 78 companies in the S&P 500 industrial sector as a group using exchange-traded funds. The Industrial Select Sector SPDR ETF XLI holds all 78 stocks in the sector weighted by market cap, which means its largest holding, GE Aerospace $(GE)$, makes up 6.1% of the portfolio. Rounding out the top five holdings of the fund are RTX Corp. $(RTX)$, Uber Technologies Inc. $(UBER)$, Caterpillar Inc. $(CAT)$ and Boeing Co. $(BA)$. The five together make up 21.7% of the portfolio.
For a less concentrated sector approach, you can consider the Invesco S&P 500 Equal Weight Industrials ETF RSPN, which is rebalanced quarterly.
Screening the industrials
Among the 78 companies in the S&P 500 industrial sector, consensus revenue estimates are available through 2027 for 74 of them. These are calendar-year estimates as adjusted by FactSet for companies whose fiscal reporting periods don't match the calendar.
Here are the 10 companies in the S&P 500 industrial sector expected to increase revenue most rapidly from 2025 through 2027:
Company Ticker Estimated revenue CAGR from 2025 through 2027 Estimated EPS CAGR from 2025 through 2027 Axon Enterprise Inc. AXON 21.0% 21.6% Uber Technologies Inc. UBER 14.5% 24.8% Boeing Co. BA 13.9% N/A Dayforce Inc. DAY 12.2% 19.5% Equifax Inc. EFX 11.8% 26.3% Quanta Services Inc. PWR 11.6% 16.0% Deere & Co. DE 10.0% 18.1% Howmet Aerospace Inc. HWM 9.9% 18.2% GE Aerospace GE 9.3% 16.2% GE Vernova Inc. GEV 9.2% 51.3% Source: FactSet
The table also includes projected EPS CAGR for all of the companies except for Boeing, which is expected to post a net loss of $1.32 a share this year, with consensus estimates for positive EPS of $3.95 in 2026 and $6.50 in 2027.
Leaving the 10 stocks in the same order, here is a summary of analysts' opinions:
Company Ticker Share buy ratings June 4 price Consensus price target Implied 12-month upside potential
Axon Enterprise Inc. AXON 83% $780.00 $741.92 -5%
Uber Technologies Inc. UBER 81% $83.45 $97.39 17%
Boeing Co. BA 69% $211.98 $216.16 2%
Dayforce Inc. DAY 57% $59.90 $68.50 14%
Equifax Inc. EFX 68% $267.00 $284.95 7%
Quanta Services Inc. PWR 68% $359.11 $358.09 0%
Deere & Co. DE 38% $507.78 $532.52 5%
Howmet Aerospace Inc. HWM 75% $173.94 $170.32 -2%
GE Aerospace GE 77% $250.88 $239.56 -5%
GE Vernova Inc. GEV 76% $488.13 $458.69 -6%
Source: FactSet
All but Deere (DE) are rated a buy or the equivalent by a majority of analysts polled by FactSet. Among the 26 analysts polled by FactSet who cover the company, 10 rate Deere a buy or the equivalent, while 15 have neutral ratings and one analyst rates the shares "underweight."
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