Industrial stocks are a hot theme in market right now, and Josh Wein and his co-portfolio managers of the Hennessy Cornerstone Growth Fund (HFCGX) are all over the trade. About a quarter of the fund’s exposure is in the sector.
Factors driving earnings growth in industrials stocks include spending on AI infrastructure, a rebound in manufacturing activity, reindustrialization thanks to reshoring trends, and an increase in defense spending amid ongoing geopolitical volatility.
But Wein’s positioning isn’t merely a calculated bet based on the trends listed above. While some investors may be in the sector to ride the aforementioned tailwinds, Wein and his colleagues reached the same conclusion by taking a different approach.
Instead of a bottom-up methodology, Wein says his team uses a top-down approach that screens out stocks, leaving them with their final basket of companies.
“We don’t invest in themes, but the work we do brings about themes,” Wein told Business Insider in an interview. “We’re not getting in the weeds on these names at all.”
Stocks are put through a few filters to narrow down the list, Wein said.
First, he and his team look at stocks with market capitalizations above $1.75 billion, and then whittle those down to the names that have a price-to-sales ratio of 1.5 or below, meaning they could be cheaply valued by investors. For comparison, the S&P 500’s current price-to-sales ratio is 3.6, and its historical average since 2001 is 1.87.
This filter doesn’t only act as a value screen, Wein said. It also drives the fund toward stocks with low profit margins, which can sometimes be overlooked by investors. This also allows the fund to avoid bubbles in hot sectors, Wein said.
Second, the remaining stocks are then filtered to those with year-over-year earnings improvement — not necessarily positive earnings growth, but an improvement in net income. This allows the fund to find relatively early turnaround stories, Wein said.
Finally, there’s share price momentum — the stock needs to have done well within the last 12 months. After applying the first two filters, the Hennessy team simply takes the 50 stocks on the list that have the best 12-month price momentum.
That may sound counterintuitive, but Wein said it’s a good indication that the stock’s fundamentals have been improving, and it helps the fund avoid “value traps” where the stock is cheap but doesn’t rebound.
“Ultimately, you’re looking at the market and seeing how they’re voting,” Wein said. He added that if investors have been “bidding the stock higher, then that earnings improvement means something to us and is legit — it’s not a fake out.”
The methodology has worked well for the fund, which is one of the flagship strategies at the $4 billion firm. It has beaten 98% of similar funds over the last five years, and 97% over the last 15 years, according to Morningstar data.
4 industrials stocks to bet on
Wein shared four stocks his fund is betting on now, all from the industrials sector.
While Wein and his team don’t focus on the growth stories behind each company, he explained some of the bullish trends driving each one. A common thread among them is the AI buildout.
“The industrial names, especially those in construction and engineering, I think there’s a long runway,” Wein said.
“I think that these are long-lived projects,” he continued. “There’s not a sales cycle involved. It’s just kind of slow and steady, big backlog businesses building out these data centers.”
The first is Centuri Holdings (CTRI), an energy infrastructure company. The company is retrofitting equipment for natural gas pipelines amid the AI boom and data centers’ demand for energy, Wein said.
The stock is down 19% in 2026, but had soared 92% from September 2025 to May 2026. It has a 1.6% weighting in the fund as of June 30.
Second is Primoris (PRIM), which builds distribution systems for gas and electricity.
PRIM has struggled lately, dropping 41% this year. However, it had risen as much as 74% from September 2025 to May 2026. It has a 1.4% weighting in HFCGX.
Third is MYR Group (MYRG), which builds electrical grids and does wiring in data centers.
The stock is up 29% in 2026, and has a 2.3% holding in the fund.
Finally, Wein highlighted Tutor Perini (TPC), a construction company that puts up anything from bridges and rail systems to residential towers and offices. Its subsidiary, Fisk Electric, is helping to build manufacturing centers for AI data center parts.
TPC has returned 29% so far this year. It has a 1.7% weighing in the fund.
