Smaller Industrials Names Seeing Surging Growth: Here's Why

Key Points

• This year, industrial stocks have beaten the market, thanks to reshoring, infrastructure spending, and other factors.
• Smaller industrial names may provide an overlooked opportunity for significant gains.
• Primoris Services, AZZ, and Dycom Industries are three firms in this category.

Despite a tumultuous several months for the market overall, the industrials sector has fared quite well. The Industrial Select Sector SPDR Fund NYSEARCA: XLI, an exchange-traded fund (ETF) that benchmarks the sector and holds around 80 of the most prominent names in the industrials sphere, has climbed by nearly 17% year-to-date (YTD), solidly surpassing the S&P 500.

Industrials' names have been buoyed by a number of factors, including the federal government's push toward reshoring of manufacturing across multiple industries, increased infrastructure spending, defense tailwinds, and more.

The usual large-cap candidates in the industrials sector—firms like Caterpillar Inc. NYSE: CAT, which has returned more than 21% YTD—receive ample investor attention. Here are a few lesser-known companies still poised to benefit from a sector-wide rally.

Major Earnings Beat for Primoris Thanks to Data Center Business, Backlog

Primoris Services Corp. NASDAQ: PRIM is a specialty contractor providing a range of construction and engineering services primarily for utilities and energy company clients. The company is coming off a recent better-than-anticipated second-quarter earnings report, in which earnings per share (EPS) of $1.68 was an impressive 58 cents higher than predicted and revenue climbed by 21% year-over-year (YOY), also beating estimates.

The firm's fast-growing data center infrastructure business was a huge part of this performance. Data centers are red-hot across the cloud and AI spaces, with companies in many new industries and sectors branching out into the space.

A key infrastructure provider like Primoris is well-positioned to capitalize on this new demand—the company's impressive $11.5-billion backlog is a testament to this.

With eight analysts showing a Buy rating for PRIM shares against one Hold, the company is favored across Wall Street. Like all industrials stocks, investors should keep an eye out for the impacts of inflation, tariffs, and supply chain dynamics, but Primoris appears positioned for a continued upswing.

Strategic Realignment Brings Success for AZZ

Metal finishing solutions company AZZ Inc. NYSE: AZZ is a key partner to fabricators and manufacturers in the industrial, infrastructure, and construction spaces, among other industries. AZZ has recently been shifting its business through a series of strategic divestments, projects, and acquisitions, and the company has already seen early success in adding customers and building capacity.

One of the highlights of 2025 for AZZ has been the acquisition of privately-held rival Canton Galvanizing. In addition to being immediately accretive for AZZ, the purchase boosts its spin galvanizing capacity and provides a strong list of new customers in Ohio, a significant market.

Combined with the commissioning of a new Missouri-based aluminum coating facility—now prepared to ramp volume and achieve a positive gross margin for the upcoming quarters—AZZ has realigned itself well. The sale of assets from Avail Infrastructure Solutions has allowed the company to trim its debt at the same time.

It's no surprise, then, that AZZ posted impressive results in its latest quarterly report. Seven out of 10 analysts view shares as a Buy.

Despite Mixed Earnings Results, Dycom's Rally Impresses

Another specialty contractor, Dycom Industries Inc. NYSE: DY caters to the telecommunications and utility infrastructure industries. In its latest earnings report, its EPS surged by over $1 to $3.33, handily beating expectations. Revenue climbed by nearly 15% YOY, coming in shy of analyst predictions—the resulting dip in DY shares may present a short-lived buy opportunity.

Dycom's earnings continue to grow rapidly thanks to its position as a go-to provider of infrastructure services for next-gen fiber optic networks and, like Primoris above, data centers.

The company's strong focus on recurring service and maintenance allows it to maximize revenue, and its nationwide presence (despite its small size) gives it a leg up on acquiring major contracts.

DY shares are up a massive 46% YTD, but analysts still believe there is room for the stock to run further. A consensus price target above $289 per share suggests more than 12% in upside potential.

On top of that, seven out of eight analysts view DY as a Buy. Despite its lower profile than some larger competitors, the firm has already been a big winner in 2025.