3 Industrial Stocks Poised to Benefit as Treasury Yields Hold Steady

Over the last two months, the yield on the benchmark 10-year U.S. Treasury note has been traversing a relatively narrow range, reflecting a tug-of-war between growth and inflation expectations. As of Nov. 19, the yield was about 4.14%. In late October, it dipped to around 3.97% before rebounding. In this period, since the beginning of October, the yield had peaked at around 4.18%. It has held steady around the 4.1% mark.

Thus, rather than a strong, sustained trend upward or downward, what’s evident is a consolidation phase. The dip below the 4% mark in mid-October suggests that investors, for a time, were leaning toward the view that economic growth might soften and that the Fed might ease policy sooner rather than later. Conversely, the rebound toward 4.1-4.15% in November indicates renewed caution about inflation and policy tightening or delay of cuts.

Why Stable Yields Support Industrial Stocks

Industrial stocks tend to perform well when the 10-year Treasury yield holds steady because stability in long-term interest rates creates a predictable environment for companies that depend heavily on capital investment, borrowing and long planning cycles. Industrials, from machinery to transportation to aerospace, rely on steady financing costs to manage large projects, expand capacity and maintain supply chains. Three such stocks that we are focusing on in this article are Kaiser Aluminum Corporation KALU, ScanSource, Inc. SCSC and Alarm.com Holdings, Inc. ALRM.

When yields stop rising, it signals that borrowing costs are unlikely to increase suddenly, giving management more confidence to commit to new orders, capital expenditures and hiring. Stable yields also reduce volatility in currency and commodity markets, which is crucial for industrial companies that operate globally and face fluctuating input costs. Predictable rates make it easier for customers to secure financing for big-ticket purchases, boosting demand across the sector. The S&P 500 Industrials Select Sector SPDR (XLI) has advanced 15.3% year to date as of Nov. 19.

This “Goldilocks” backdrop encourages investors to rotate into cyclical sectors that benefit from stable growth. As a result, industrial stocks typically outperform during periods of rate stability, supported by clearer earnings visibility, stronger order books and renewed confidence in global economic momentum. Thus, it will be prudent to invest in the sector in these times.

Our Choices

The stocks below have a Zacks Rank #1 (Strong Buy) or #2 (Buy). The search was also narrowed down with a VGM Score of A or B. Here, V stands for Value, G for Growth and M for Momentum. The score is a weighted combination of these three metrics. Such a score allows one to eliminate the negative aspects of stocks and select winners. You can see the complete list of today’s Zacks #1 Rank stocks here.

Kaiser Aluminum is a semi-fabricated specialty aluminum mill products company. KALU’s expected earnings growth rate for the current year is 133.9%. The Zacks Consensus Estimate for its current-year earnings has increased 26.5% over the past 60 days. This Zacks Rank #1 company has a VGM Score of A.

ScanSource distributes technology products and solutions globally, offering specialty mobility, POS, security, networking, cloud, connectivity and advisory services across diverse industries. SCSC’s expected earnings growth rate for the current year is 15.7%. The Zacks Consensus Estimate for its current-year earnings has increased 4% over the past 60 days. This Zacks Rank #2 company has a VGM Score of A.

Alarm.com provides IoT-based security, automation, energy management and analytics solutions for residential, business and enterprise customers, offering connected devices, monitoring tools and cloud-based platforms globally. ALRM’s expected earnings growth rate for the current year is 9.7%. The Zacks Consensus Estimate for its current-year earnings has increased 5.5% over the past 60 days. This Zacks Rank #1 company has a VGM Score of A.

Bottom Line

The 10-year Treasury yield has held near 4.1% in recent months, signaling a consolidation phase driven by shifting growth and inflation expectations. Stable long-term rates create a predictable environment for capital-intensive industrial companies, supporting investment, demand and earnings visibility. With the Industrials sector advancing solidly this year, steady yields continue to strengthen the case for investing in the group.

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This article originally published on Zacks Investment Research (zacks.com).

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