Morgan Stanley sees US industrial sector poised to benefit from reshoring

Investing.com -- Morgan Stanley analysts expect a bifurcated recovery in 2026, with momentum led by companies tied to fixed-asset investment while production exposure faces a slower recovery and consumer-related stocks remain worst positioned.

The firm said the Iran conflict exacerbates this disconnect, with higher energy prices and rates weighing on consumer spending power. Meanwhile, less reliable supply chains and the widening gap between US and global gas prices increase the likelihood that additional production will shift to the US market.

In early 2026, US Capital Goods imports have maintained approximately 30% year-over-year growth while US Consumer Goods imports continue to decline, tracking down 30% year-over-year, according to Morgan Stanley. The firm noted this bifurcation represents a significant disconnect from historical patterns.

US Capital Goods imports are holding 35% growth versus 2022-24 levels, suggesting US re-industrialization is underway and aligns with Morgan Stanley’s $10 trillion US Reshoring thesis.

The firm said consumption of goods does not change in a US Reshoring scenario and could even decline due to higher costs. The beneficiaries of the Western migration are not the companies selling the products, but instead those constructing and serving the facilities, which are US Industrials.

After the outsized first half 2025 pull-forward and subsequent second half 2025 destocking, data suggests US inventory levels have largely normalized, Morgan Stanley said. US imports have settled into a normalized run-rate matching levels observed prior to the November 2024 election.

China exports have remained under pressure in the first quarter of 2026. In the 25 days following Lunar New Year 2026, China exports are tracking 2% below levels observed after Lunar New Year 2025, despite the pickup in US imports.

Morgan Stanley views stocks including Rockwell Automation (NYSE:ROK), Parker-Hannifin (NYSE:PH), W.W. Grainger (NYSE:GWW), Johnson Controls (NYSE:JCI), Hubbell (NYSE:HUBB), Vertiv (NYSE:VRT), AMETEK (NYSE:AME), Trane Technologies (NYSE:TT), Eaton (NYSE:ETN), Regal Rexnord (NYSE:RRX), and Gates Industrial (NYSE:GTES) as best positioned. The firm expressed concern about Carrier Global (NYSE:CARR), Lennox International (NYSE:LII), Emerson Electric (NYSE:EMR), Ingersoll Rand (NYSE:IR), Allegion (NYSE:ALLE), Otis Worldwide (NYSE:OTIS), Stanley Black & Decker (NYSE:SWK), and 3M (NYSE:MMM).

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