Industrial stocks are benefiting from long-term shifts in technology and manufacturing, with companies adapting to AI-driven infrastructure and electrification trends. Analysts say innovation and portfolio restructuring are helping long-established firms reposition for growth after years of stagnation.
BNN Bloomberg spoke with Jonathan Sakraida, senior research analyst at CFRA, who outlined his top picks in the sector: 3M, Eaton Corporation and Vertiv Holdings. He points to rising demand for power management, data centre infrastructure and industrial automation as key themes for sustained earnings growth.
Key Takeaways
- 3M is streamlining its portfolio and accelerating innovation, targeting faster organic growth across industrial segments.
- Eaton is positioned to benefit from megatrends in electrification, aerospace recovery and rising data centre demand.
- Vertiv’s earnings growth and margins are expanding rapidly as AI infrastructure drives record orders and backlog.
- Industrial firms are shifting toward secular growth markets and away from low-growth consumer products.
- AI, electrification and reshoring are reshaping industrial strategies and supporting multi-year earnings momentum.
Read the full transcript below:
ROGER: Time now for Hot Picks, and our next guest has the Post-it Note and Scotch tape maker 3M as his top pick. He says the company is accelerating product launches over the next three years, reversing years of stagnation. Joining us now is Jonathan Sakraida, senior research analyst at CFRA. Jonathan, thanks very much for joining us.
JONATHAN: Thanks for having me.
ROGER: I know we think of 3M as Post-it Notes, but there’s a lot more to it than that — and now it’s getting even bigger, you say?
JONATHAN: Yeah, they have dozens of product lines. They’re heavily diversified — almost to a fault. Right now, they’re trying to prune and pull back parts of their portfolio to make sure they’re best aligned for sustainable, organic revenue growth. In the third quarter, they identified about 10 per cent of sales as potential divestitures, really exiting slower, no-growth businesses to help drive the earnings growth trajectory overall. We think this quarter really cemented that it’s a turnaround. Many years of stagnation — both on sales and margins — seem to be in the rear-view mirror.
ROGER: And what are some of the businesses they’re getting rid of, and where is the focus turning?
JONATHAN: They haven’t yet identified which business units are up for sale. They’ve said these are areas where they can’t compete efficiently or innovate, and that other companies might be better suited to operate them. Where they’re shifting focus is toward the secular growth tailwinds we’re seeing across industrials — things like data centres, infrastructure, and electrical utilities. They’re aiming to grow through the business cycle and not be so cyclically driven.
ROGER: And which parts of 3M will benefit from AI and data centres and things like that?
JONATHAN: Primarily their industrial and manufacturing-facing product lines — not so much consumer. I think consumer could see more pruning since it’s less profitable and has limited organic growth. I wouldn’t be surprised if they spun that off entirely. There’s not much innovation potential with Scotch tape compared to aerospace, automotive or data centre markets. They’re really focusing on where they can innovate, and that’s mostly outside of consumer.
ROGER: All right, let’s move to Eaton Corporation. What are you liking about that right now?
JONATHAN: Eaton is well positioned to benefit from several megatrends — aerospace, data centres, electric utilities. They’re on the periphery of these huge shifts, absorbing demand and capitalizing on it. Data centres are seeing huge demand, and Eaton is a leading supplier of power management systems in that space. In aerospace, we’re seeing production ramp up again at Boeing and Airbus after years of supply chain and quality issues. Eaton is well suited to capture that growth, particularly in power management for aircraft. We really like its exposure to these markets — it’s showing above-average growth for a company its size.
ROGER: Which, in this market, is always nice to hear. Last one — Vertiv Holdings.
JONATHAN: Vertiv has become a very popular name with substantial growth in recent years. It’s gone from operating margins below 10 per cent to now approaching the mid-20s. The stock is up almost 60 per cent year to date, but we think that’s justified. The earnings growth trajectory has ramped up dramatically. Each quarter, we’ve seen guidance lifted and estimates beaten. About 90 per cent of its sales are tied to data centres, making it a core beneficiary of AI infrastructure spending. And it’s not sitting still — it’s partnering with Nvidia, staying close to customers, and introducing new products that align with where the market is moving. We think it’s one of the most attractive growth names in the industrial space.
ROGER: How important is that — when you see a company actively making deals and partnerships like that?
JONATHAN: Very important. It’s easy for competitors to jump into the space and take market share. So if they want to maintain pricing power and keep absorbing strong order volumes, they need to keep moving. In the third quarter, orders were up 60 per cent year over year organically — that’s an acceleration. Earlier this year, there were concerns about a slowdown, but the opposite has happened. Vertiv has done a great job capitalizing on demand, and it’s crucial they keep executing so they’re not shouldered out by other large players, including Eaton.
ROGER: On that note, we’ll leave it there. Jonathan, thanks for joining us.
JONATHAN: Absolutely. Thank you for having me.
ROGER: Jonathan Sakraida, senior research analyst at CFRA.
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| MMM NYSE | N | N | N |
| ETN NYSE | N | N | N |
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This BNN Bloomberg summary and transcript of the Oct. 24, 2025 interview with Jonathan Sakraida are published with the assistance of AI. Original research, interview questions and added context was created by BNN Bloomberg journalists. An editor also reviewed this material before it was published to ensure its accuracy and adherence with BNN Bloomberg editorial policies and standards.
