Undervalued Industrials Stocks Poised for a Strong Rebound in December 2025

The industrials sector has shown renewed vigor in December 2025, driven by a combination of analyst upgrades and favorable macroeconomic conditions. As global demand for infrastructure, defense, and energy solutions accelerates, several stocks have emerged as compelling opportunities for investors seeking exposure to a sector poised for a rebound. This analysis identifies five industrials stocks that have attracted attention from analysts and demonstrate strong fundamentals, despite being undervalued relative to their growth potential.

GE Vernova (GEV): A Buyback-Driven Catalyst

GE Vernova (GEV) has surged 107% year-to-date (YTD), fueled by a strategic share buyback expansion and a doubled dividend. The stock's performance reflects investor confidence in its transition to a focused energy and power solutions provider. GEV now holds a 3.63% weighting in the Industrial Select Sector SPDR Fund (XLI), underscoring its growing influence in the sector. Analysts have highlighted its improved capital allocation and alignment with decarbonization trends, making it a top-tier play for those betting on the energy transition.

RTX Corp. (RTX): Defense Spending Fuels Earnings Outperformance

RTX Corp. (RTX), a leader in aerospace and defense, has outperformed expectations with a 57% YTD gain, closing at all-time highs. Its Q3 2025 earnings report, which delivered $1.70 per share (well above the $1.41 consensus), underscored the company's ability to capitalize on robust defense spending and operational efficiency. Analysts have upgraded RTX to "Strong Buy", citing its backlog of $16.6 billion and a favorable geopolitical environment that supports long-term contract visibility.

Johnson Controls (JCI): Resilience in a Volatile Market

Johnson Controls International (JCI) has demonstrated defensive qualities, rising 1.7% during a mid-December market sell-off. The company's pivot to a pure-play commercial building solutions provider has unlocked growth in AI-driven infrastructure, particularly with its Coolant Distribution Unit (CDU) for data centers. JCI's record backlog and strategic focus on electrification position it as a reliable long-term holding, even amid broader market fluctuations.

Eaton Corporation (ETN): Electrification and Grid Modernization

Eaton Corporation (ETN) has positioned itself at the intersection of electrification and grid modernization, with orders for its Electrical Americas sector rising 70% in Q3 2025. The company's $9.5 billion acquisition of Boyd Thermal in November 2025 further solidifies its role in data center power and thermal management. Trading at $328 after a pullback from its highs, ETN offers a compelling entry point for investors seeking exposure to the infrastructure boom.

Fluence Energy (FLNC): Grid Storage's Rising Star

Fluence Energy (FLNC), a grid storage specialist, has seen demand outpace supply, with a 21.5% average backlog growth over the past two years. Its 27.4% annual earnings per share (EPS) growth and improving free cash flow margins suggest a path to financial self-sufficiency. Analysts have flagged FLNC as a long-term winner in the renewable energy transition, where its expertise in large-scale storage solutions is increasingly critical.

Conclusion: A Sector Poised for Rebound

The industrials sector's December 2025 rally is underpinned by analyst upgrades and strong earnings performance, particularly in defense, infrastructure, and energy transition plays. GEV, RTX, JCI, ETN, and FLNC exemplify the sector's potential, combining technical momentum with strategic positioning in high-growth areas. For investors, these stocks represent undervalued opportunities to capitalize on a sector that is regaining its footing amid shifting global dynamics.