Brooke ThackrayIndustrial Select Sector SPDR FundXLIPAST TOP PICKFeb 20, 2014

Still likes industrials because we're in a cyclical economic rebound. Emerging markets, Europe and Japan all offer opportunity in industrials.

One of the first names that comes to mind for exposure to the industrial space. Fairly inexpensive at just 8 bps.

With recent events in Venezuela (and that's a longer-term type of thing), he certainly sees the path for more infrastructure buildout around the world. Obviously, some of the US names are multinational so you could stick with those. There are global names out there, but the US names will get you far.

Names like HON, GE, BA. Mainly in the manufacturing sector. Chose it today because chart has recently gone sideways in consolidation. Now entering strong seasonal period. As a backdrop, seeing US economy stronger than expected. World economy is doing OK. No recession happening.

He loves to see consolidation right before the seasonal period. Industrial seasonality usually runs from October 28 (today) to May 5, though it can lag a bit in January. 

25% of this ETF is US defense stocks, and that's the reason he bought. His view then, and certainly these days, is that's where you want to be. A lot of the other defense ETFs also included BA, and he doesn't want to be there.

Industrials have done very well for him, but are now expensive at 24x forward PE, higher than the S&P. Industrials are cyclical, too.

Broadly speaking, likes industrials. Top names here:  CAT, RTX, GE, UBER, UNP. BA would be in the top 10, but #10 at this point. In general, infrastructure spend will be higher. Overall US economy is not going into recession, so some of these names are undervalued. This sector has room to catch up to technology. Brand-new 52-week high today.

Makes a lot of sense. Also consider PAVE.

Likes industrials in the US compared to other sectors because there's growth here.

He likes US industrials. XLI has done well but can go higher. The rally in the US is expanding beyond megatech already. Aerospace and defense on drivers, and this holds big names like Raytheon.

Seasonal stock that will continue to own. Jan-May good time to own shares. Will continue to own. Recent pullback a good time to buy. 

Given all the economic uncertain, the agriculture sector isn't willing to invest in capital equipment (i.e. Deere), so this sector lacks investor excitement.

Large industrials are strong seasonally from late October to end-Decemeber, then January into May. If we see rotation out of tech, industrials will benefit. He expects this to happen. XLI is currently at support.

XLI charges only 10 basis points, pays a small 1.58% dividend yield, but it holds some heavy hitters: Honeywell, UPS, Union Pacific, Boeing, Raytheon and Caterpillar in that order. Yes, GE also sits in this basket, but so do Lockheed Martin and Deere. The biggest holding, Honeywell, has exposure to defense, but more so automation in manufacturing, a growing area and one that’s needed in the current labour shortage. Read: Canadian Tire, Savaria & XLI