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Market analysis Score 15 Neutral

Investors Shift Focus from Tech to Industrial Growth Stocks

Apr 03, 2026 12:35 UTC
Short term

As the market rotates away from tech, two industrial stocks are emerging as smart choices for growth. Watts Water Technologies and ATI Inc. offer exposure to critical infrastructure and materials sectors.

  • Market rotation in 2026 is moving away from tech stocks toward broader market gains.
  • Watts Water Technologies reported $2.44 billion in sales and 17% higher earnings in 2025.
  • ATI Inc. achieved $4.6 billion in sales in 2025, with aerospace and defense revenue making up 68% of quarterly sales.
  • Watts is positioned to benefit from data center cooling demand, projecting 8% to 12% sales growth in 2026.
  • ATI has secured supply agreements with Boeing and Airbus, supporting its new titanium production facility.
  • Investors should consider risks like European market softness for Watts and input cost pressures.

The market rotation in 2026 is signaling a shift away from relying on mega-cap tech stocks to drive portfolios. While the Nasdaq Composite has moved sideways, the S&P 500 Equal Weight Index continues to climb, indicating broader market gains. For investors looking to reallocate $1,000 or more, the challenge is to do so strategically. Watts Water Technologies (WTS) is a Massachusetts-based manufacturer of plumbing, heating, and water quality solutions that reported record 2025 results. The company achieved $2.44 billion in sales, an 8% increase, with an operating margin of 18.4% and free cash flow of $356 million. Diluted earnings per share rose 17% to $10.17. Watts is capitalizing on the growing demand for data center cooling solutions, with management projecting 8% to 12% sales growth in 2026. ATI Inc. (ATI) is a Texas-based specialty materials manufacturer producing titanium alloys and components for aerospace, defense, and energy sectors. In fiscal year 2025, ATI reported $4.6 billion in sales, a 5% increase, with aerospace and defense revenue now accounting for 68% of quarterly sales. The company secured long-term titanium supply agreements with Boeing and Airbus, supporting its new titanium alloy sheet facility in South Carolina. Both stocks offer exposure to critical infrastructure and industrial growth, though investors should be mindful of potential risks such as European market softness for Watts and input cost pressures.

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