You don’t have to be a rocket scientist or a neurosurgeon to recognize that the stock market is going through some pretty serious turbulence right now. The conflict in the Middle East is, of course, a big source of this turbulence, although it would be naïve to pretend that the overvalued stocks of overrated artificial intelligence (AI) companies don’t play a role in the matter either.
While this change is not a reason to exit the market completely, it could be said that is a reason to rethink your holdings. This may well be the time to get back to basics and own stakes in industrial companies that actually make, build or make things of tangible value. Here’s a closer look at three of those names that could outperform a suppressed one S&P 500(SNPINDEX: ^GSPC) this year.
Will AI create the world’s first billionaire? Our team just published a report on a little-known company called “Indispensable Monopoly” that provides critical technology that both Nvidia and Intel need. Continue “
Based solely on the company’s recent performance, it may be a little difficult to get excited about owning a piece of Fluorine(NYSE: FLR). Heavy engineering and construction equipment revenue fell 5% to $15.5 billion last year, which had a similar effect on adjusted net earnings. The stock has also been upset several times since early last year.
Now take a step back and look at the bigger picture. This company’s business portfolio currently stands at $25.5 billion, and analysts project revenue growth of 5% this year to accelerate to a growth rate of more than 7% next year, restoring earnings growth as a result. This type of ebb and flow is the norm in this particular part of the construction industry, where planning and permitting alone can take years.
Then there’s the broader tailwind blowing in this company’s favor, now and for the foreseeable future. That is the need for more electricity driven by AI data centers and everything that entails.
Goldman Sachs predicts that AI technology will consume 50% more energy in 2027 than in 2024, with up to 165% increase in electricity use on cards between then and 2035. This means more natural gas, infrastructure and energy production facilities, all of which Fluor manages. It even means new, larger nuclear power plants, which are also in Fluor’s wheelhouse.
However, we will not necessarily have to wait for this tailwind to translate into real income. Once again, the analyst community is calling for this year’s revived sales growth to accelerate next year. That’s why the analysts’ one-year consensus price target for FLR is $54.75, or 27% above the current stock price.
You may be more familiar with W.M.(NYSE: WM)the garbage collection company formerly known as Waste Management.
It is true that it has nothing attractive compared to more fascinating industries such as quantum computing, biotechnology or some energy companies. However, what WM lacks in dynamism it more than makes up for in reliable income. As long as humans inhabit the Earth, they will litter… about 2 billion tons each year, according to World Bank figures. Someone has to do something with that.
Image source: Getty Images.
That said, don’t be fooled into thinking that garbage collection is a simple, low-margin business with limited marketing and lots of competition. None of those things are true (anymore).
In fact, as locations to establish landfills decrease in number and environmental regulations continue to pile up, the complexity of this industry increases, increasing WM’s pricing power. A growing number of recycling mandates also put pressure on WM’s 105 recycling plants, which generate revenue through the sale of these materials. The company has even developed a medical waste business… a global industry that Precedence Research believes is poised to grow from $14 billion last year to nearly $28 billion in 2035, as regulatory oversight increases in step with needs.
This company’s single-digit revenue growth may not be exciting. It’s reliable, though, and WM is actually doing quite a bit with the opportunity at hand. That’s more than can be said for many other S&P 500 companies right now.
Finally, add US Rare Earths(NASDAQ: USAR) to their list of industrial stocks that could outperform the S&P 500 in 2026 (albeit for a slightly different reason than WM and Fluor might).
It’s not a household name, at least not yet, mainly because it’s not yet generating revenue, let alone profits. However, that is likely to change soon.
That’s because construction of the company’s rare earth magnet manufacturing facility in Stillwater, Oklahoma, is nearly complete and production is expected to begin sometime in the first half of this year. Initial annual production is expected to be 5,000 metric tons, although USA Rare Earth anticipates final production of up to 10,000 metric tons of these industrial magnets per year, making them a business that Mordor Intelligence expects to be worth more than $74 billion per year by 2031.
Starting production at this facility could, of course, prove catalytic for USAR stocks, particularly given how dependent the United States still is on China for permanent magnets.
However, the ultimate opportunity here is much greater than simply making magnets. Magnets are used in everything from computers to electric vehicles, medical devices, and more. USA Rare Earth also owns a rare earth element mine in Round Top, Texas, that could ultimately produce more than 300,000 metric tons of rare earth metals, according to data from the USGS Earth Mapping Resources Initiative and the Texas Comptroller of Public Accounts. At current prices, that’s enough to generate more than $100 million in annual production for at least 20 years.
Long-term stories like this can be difficult to follow through to the end. And you might not necessarily want to. However, there are plenty of rumors and a clear catalyst on the horizon for 2026, so at least the foreseeable future could be fruitful enough for shareholders.
Before you buy shares of the S&P 500 index, consider this:
He Varied and Dumb Stock Advisor The analyst team has just identified what they believe are the 10 best stocks for investors to buy now… and the S&P 500 index was not one of them. The 10 stocks that made the cut could produce monster returns in the coming years.
Consider when netflix made this list on December 17, 2004… if you invested $1,000 at the time of our recommendation, you would have $514,000!* Or when NVIDIA made this list on April 15, 2005… if you invested $1,000 at the time of our recommendation, you would have $1,105,029!*
Now, it is worth noting stock advisor the total average return is 930%: An overwhelming outperformance of the market compared to the S&P 500’s 187%. Don’t miss the latest Top 10 list, available with Stock Advisorand join an investing community created by individual investors for individual investors.
See the 10 actions »
*Stock Advisor returns starting March 16, 2026.
James Brumley has no position in any of the stocks mentioned. The Motley Fool has positions in Goldman Sachs Group and recommends it. The Motley Fool recommends WM. The Motley Fool has a disclosure policy.
These 3 Industrial Stocks Can Outperform the S&P 500 in 2026 originally posted by The Motley Fool
