Barclays upgrades multi industry stocks

December 06, 2024 06:41 AM AEDT | By Investing

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Investing.com -- Barclays expects the multi-industry stocks to deliver an in-line performance in the next year and maintains a neutral sector view.

A strong fourth-quarter equity market rotation has propelled multi-industry (MI) stocks to one of their best years in recent memory, with the sector outperforming the S&P 500.

The recent rally has been fuelled by optimism surrounding the potential policy impacts of Trump presidency, like less regulation, increased domestic business investment, and lower corporate taxes—conditions that similarly benefited MI stocks during Trump’s first term in 2017, when the sector outperformed by 150 basis points.

Though Barclays (LON:BARC) analysts warn that these anticipated gains may have already been "pulled forward" into the final months of 2024, leaving limited room for further outperformance.

Barclays highlighted Carrier citing very high HVAC exposure, some data center exposure, and a low valuation.

Barclays also upgraded Illinois Tool Works Inc (NYSE:ITW) and Rockwell Automation Inc (NYSE:ROK) from “under-weight” to “equal-weight” largely because of their revenue exposures.

Brokerage also upgraded Gates Industrial Corporation plc (NYSE:GTES)to “overweight” from “equal-weight,” due to its high supply-chain integration exposure and low valuation.

While multi-industry stocks have benefited from cyclical tailwinds and optimistic narratives in 2024, Barclays cautions that elevated valuations, slowing organic growth, and the risk of overextended gains could temper enthusiasm in the coming year.

This article first appeared in Investing.com

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