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Crane is a diversified industrial firm that manufactures a broad range of products, including valves, pumps, aerospace components, and fiberglass-reinforced plastic panels. Its business is organized into three segments: aerospace and electronics, process flow technologies, and engineered materials. Crane generated approximately $2.1 billion in revenue in 2023.

Donaldson is a leading manufacturer of filtration systems and replacement parts (including air filtration systems, liquid filtration systems, and dust, fume, and mist collectors). The company serves a diverse range of end markets, including construction, mining, agriculture, truck, and industrial. Its business is organized into three segments: mobile solutions, industrial solutions, and life sciences. Donaldson generated approximately $3.6 billion in revenue and $544 million in operating income in its fiscal 2024.

In the second half, the U.S. large-cap market has continued its rotation toward new favorite sectors. A surprising six sectors are doing better than the market. In 2H23, the three growth sectors that led in the first half won the year and were the only outperformers in the second half of that year. The rotation toward new sectors includes an intense pivot toward perceived beneficiaries of a lower interest rates. The best sector in the second half has been Financial, with a 25.9% gain between midyear and the end of November. The second- and third-best sectors in 2H24 have interest-rate sensitivity. The Utility sector is up 20.1% in 2H24 to date; and Real Estate is up 17.7%. Utilities have a well-established history of outperformance in a falling interest-rate environment. REITs have a less-clear relationship. They were long buried in the Financial sector. And REITs are impacted not only by the yield curve but by secular changes wrought by COVID-19. The Industrial sector has had a big 2H, rising 20.5% with gains partly weighted to the post-election period. Consumer Discretionary has done an about-face from the first half, rising 21.9% in the second half on hopes that lower rates will drive big-ticket consumer spending. The sixth of six sectors beating the market in 2H24 is Communication Services. Within this sector, social media plays such as Alphabet and Meta appear positioned to monetize AI in multiple ways, from licensing of multimodal LLMs to delivery of AI-as-a-service. For the full year, six sectors also are either beating the S&P 500 or within a point of catching up. The clear takeaway from the 2024 sector map is impressive breadth. (Jim Kelleher, CFA)

The Vickers Top Insider Picks is a daily report that utilizes a proprietary algorithm to identify 25 companies with compelling insider purchase histories based on transactions over the past three months.