From ITT to Teledyne: UBS Names 'Hidden Gem' Stocks Set to Explode This Earnings Season

With the next earnings season approaching, UBS named its top 'buy-rated' picks in the small- to mid-cap industrials sector that investors should keep an eye on.

'We believe the double-digit valuation discount for SMID Industrials vs. the Large Cap Multis provides further runway for our coverage to outperform, and that shifting investor focus and rotation towards SMIDs could be a meaningful theme,' the analysts said.

UBS noted that for ITT (NYSE: ITT), it expects the component manufacturer for the aerospace, transportation, energy, and industrial markets to navigate towards the high end of the latest earnings-per-share guidance of $6.35 to $6.55 (£4.73 to £4.87). 'If anything, we think our model forecast of ~3% organic growth this year could prove light, especially considering orders and backlog growth the last few Qs.' The stock price is up 24% year-to-date.

The next on UBS' list is Teledyne Technologies (NYSE: TDY), a provider of electronic components and instruments. Analysts believe the company's strength in orders keeps them constructive on H2 results.'Return of the M&A flywheel does not look priced in. The longer cycle A&D businesses are likely seeing continued healthy growth, and might even be outperforming given military funding stimulus in the EU and rising drone-based operations, which we think benefits TDY,' the brokerage stated. The stock price is up 23% YTD.

On SPX Technologies (NYSE: SPXC), UBS said it is confident in the underlying business and earnings setup for H2 and 2026. The company's recently raised capital could be utilised sooner than expected for both inorganic investments and acquisitions. The supplier of infrastructure equipment has a 'unique' opportunity in data centres, UBS said, adding that the stock was among its list of 'winners that should keep winning' in the sector. The stock price is up 24% YTD.

On Zebra Technologies (NASDAQ: ZBRA), analysts believe that an H2 beat and potential demand momentum into 2026 could drive upside after the stock's Q2 correction. UBS sees upward revisions to 2026 earnings-per-share estimates on H2 margin beat and the accretion of the Elo deal being added to models, with considerable potential upside to Q4 sales. The stock price of the automation solutions provider is trading near a multi-year low, making it a lucrative investment opportunity, according to UBS. The stock is down 19% YTD.

UBS also shared insights on the Crane Holdings (NYSE: CR) stock, which is up 19% YTD. Analysts like the setup for Crane's earnings, expecting the industrial products company to exceed the $5.50 to $5.80 (£4.09 to £4.32) EPS guidance range. 'Updated guidance from Q2 seems conservative to us, particularly on A&E sales growth and implied H2 margins,' according to the brokerage.

Xylem Inc (NYSE: XYL) is a water technology provider, which UBS expects to post in-line results in Q3 and 'slightly' better than management EPS guidance of $1.20 to $1.25 (£0.89 to £0.93). UBS said it reiterated its Q3 estimates on the stock, 'which are at the high end of guidance range.' The stock price gained over 22% YTD.

Cognex Corp. (NASDAQ: CGNX), a provider of AI machine vision solutions for industrial automation, is witnessing growth broaden outside of the warehouse, and 2026 estimates appear too conservative, according to UBS. The company's Q2 financial results also reiterated the brokerage's 'buy' rating on the stock, as it remains positive on the new management's capability to take the company forward. The stock has climbed 27% YTD.

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