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11 stocks for investors to look at in a booming corner of the stock market

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  Published in Stocks and Investing on Thursday, September 18th 2025 at 6:26 GMT by Business Insider
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Industrial Stocks to Buy in 2025 – UBS’s Top Picks and Investment Takeaways

In a sharply written Business Insider piece published on September 23, 2025, UBS analysts laid out a short‑list of industrial‑sector equities that, according to their research, should be on the radar of both institutional and retail investors. The article – “Industrial stocks to buy: top stock picks, investing advice, UBS” – offers a concise narrative of the macro backdrop, the key catalysts that are expected to lift the sector, and a detailed breakdown of the stocks that UBS believes will deliver the best risk‑adjusted returns in the coming year.

1. Macro‑Economic and Sectoral Context

U.S. industrials have seen a resurgence since the lows of 2020, buoyed by a combination of several factors that the UBS report identifies:

The analysts note that while the industrials index has already climbed roughly 15 % YTD, there is still “substantial upside potential” because many firms have not yet priced in all the tailwinds, particularly the renewed focus on electrification and green hydrogen.

2. UBS’s Five‑Stock Playbook

1. 3M Co. (MMM)

• Core business: Diversified technology and manufacturing, ranging from safety & protection to healthcare and industrial solutions.
• Key growth driver: The electro‑mechanical division is expanding into automotive sensor technology, a segment projected to grow at a CAGR of 18 % through 2030.
• Financial highlight: 2024 EPS grew 12 % YoY on $1.8 B in operating cash flow. UBS sees a +18 % upside over the next 12 months based on a revised 2025 revenue forecast.
• Risk: Regulatory headwinds in Europe could temper the European unit’s growth.

2. Honeywell International (HON)

• Core business: Aerospace, building technologies, safety & productivity solutions, and specialty materials.
• Key catalyst: A new next‑gen aircraft engine slated for 2027, expected to add $3 B in incremental revenue per decade.
• Financial highlight: 2024 net income rose 10 % to $3.3 B, with a 30‑day operating margin of 25 %. UBS projects a 2025 EBITDA margin expansion from 28 % to 31 %.
• Risk: The cyclical nature of the aerospace sub‑sector means that a slowdown in airline orders could compress margins.

3. Caterpillar Inc. (CAT)

• Core business: Heavy‑construction and mining equipment, diesel engines, and power solutions.
• Key catalyst: A new line of electric haul trucks targeting the mining industry, anticipated to launch in 2026.
• Financial highlight: 2024 sales hit $43 B, up 8 % YoY. The company’s free‑cash‑flow yield is currently 4.5 %. UBS sees a +15 % upside on the assumption of a 10 % year‑on‑year revenue growth driven by infrastructure projects.
• Risk: Commodity price volatility could affect mining orders, while the transition to electric haul trucks introduces significant R&D costs.

4. United Airlines Holdings (UAL)

• Core business: Passenger airline operations, along with maintenance, repair, and overhaul (MRO) services.
• Key catalyst: The “Project 2030” expansion plan that includes the procurement of 300 new fuel‑efficient aircraft, projected to reduce fuel cost per available seat mile (ASM) by 10 % by 2035.
• Financial highlight: 2024 net income of $1.5 B after a recovery from a $1.7 B loss in 2022. UBS projects a 12 % increase in revenue for 2025 as U.S. domestic demand rebounds.
• Risk: Labor disputes and regulatory restrictions could delay fleet upgrades.

5. Emerson Electric Co. (EMR)

• Core business: Industrial automation, process control, and climate technologies.
• Key catalyst: A new AI‑driven manufacturing platform aimed at boosting operational efficiency for global factories.
• Financial highlight: 2024 revenues rose 9 % to $18 B, with a 10‑year CAGR of 7 %. UBS expects the company to outperform peers as demand for industrial automation rises in response to the green‑economy shift.
• Risk: Cybersecurity threats and data‑privacy regulations could impose additional compliance costs.

3. Investment Rationale & Risk Management

UBS underscores a few overarching principles that underpin the recommendation:

• Valuation Discipline: While the industrials sector is trading near historical multiples (P/E ≈ 18‑20x), the selected names have lower relative valuations when compared to their peers. For instance, 3M’s forward P/E sits at 16x versus Honeywell’s 20x.

• Resilience to Cycles: Companies that are heavily dependent on a single macro‑cycle (e.g., airlines) are treated with caution. That’s why UBS positions Caterpillar and Emerson – both benefiting from infrastructure and automation, which tend to run longer cycles.

• Catalytic Events: UBS looks for companies where a clear, company‑specific event can act as a “buy” trigger. The electric truck line for Caterpillar and the new engine for Honeywell are concrete examples.

• Diversification: Even within the industrials theme, UBS recommends a diversified basket to mitigate sector‑specific risk. They advise a 40 % allocation to large caps like 3M and Honeywell, a 30 % allocation to mid‑caps such as Emerson and Caterpillar, and a 30 % allocation to more growth‑oriented firms like United Airlines and the newer technology arms of Honeywell.

• Environmental, Social, Governance (ESG): UBS points out that all five companies have robust ESG programs, which are increasingly a factor for institutional investors. For example, Caterpillar’s “Zero‑Carbon by 2050” plan has already cut CO₂ emissions by 25 % since 2018.

4. Takeaway for Retail Investors

The Business Insider article concludes with a concise, bulleted summary for the retail audience:

1. Buy 3M (MMM) – Strong diversification, growing in automotive sensors.
2. Add Honeywell (HON) – Aerospace expansion and a robust safety‑tech pipeline.
3. Caterpillar (CAT) – Infrastructure boom and electrification of mining.
4. United Airlines (UAL) – Airline recovery plus fleet‑upgrade savings.
5. Emerson (EMR) – Automation surge driven by Industry 4.0.

Risk Alert: The industrials theme is sensitive to commodity prices, interest‑rate cycles, and geopolitical tensions that can affect defense budgets. UBS advises keeping an eye on macro‑economic indicators and sector‑specific news, particularly earnings guidance updates.

5. Final Word

In a period of economic transformation, UBS’s analysis points to a set of industrial stocks that have solid fundamentals, clear growth catalysts, and attractive valuations. The article from Business Insider distills complex research into actionable advice, making it a useful starting point for investors who want to tap into the manufacturing, aerospace, and infrastructure momentum of 2025. As always, investors should align these picks with their own risk tolerance and long‑term investment horizon.