You can make a lot of money by buying the stocks that the herd is "all in" on and riding the trend up while folks keep pouring in.
In recent years, this has been the tech trade. The tech-heavy Nasdaq Composite Index is currently at all-time highs.
Unfortunately, this type of investing can also burn you if you don't get out at the right time. Far too often I've seen investors chase hot stocks near the top... only to hold them through the bust.
I've learned over the years that the best long-term strategy comes from buying stocks that the crowd largely ignores. That's because today's overlooked stocks can become tomorrow's winners...
See, when investors eventually get burned by the hot stocks everyone has been chasing, they often start looking for opportunities elsewhere. So they rotate into sectors that are less expensive and less popular – but that still seem promising. Money and attention can then flow into these neglected sectors and lead them to outperform other parts of the market.
Here at Stansberry Research, we've done very well following a contrarian strategy and looking for tomorrow's winners. That's why I want to highlight one of the most overlooked sectors out there today: industrials.
Not many investors are talking about them. But I think the sector is about to do very well compared with the broader market... especially a specific kind of industrial stock, which I'll get to shortly.
First, I want to point out that institutional investors currently want nothing to do with the industrial sector.
The "smart money" is unusually underweight industrials, with active positioning in the sector now at roughly its lowest level over the past five years. We can see this in the chart below...
Note that this chart isn't showing how much institutional investors own of each sector... It's showing how their active positioning compares with their positioning over the past five years.
A 0% represents extremely low positioning relative to history, and 100% represents extremely high positioning.
Industrials have fallen from roughly the 15th percentile a month ago to near the bottom of the five-year range today. That suggests that active managers have become very cautious toward the sector.
It's also a stark contrast with information technology, where institutional positioning has climbed to roughly the 90th percentile – the highest level among the major sectors shown.
Moving on, the next chart compares the performance of S&P 500 industrial stocks with the broad S&P 500 Index. When this ratio is high, it means industrial stocks are outperforming. When it's low, it means they're underperforming.
As you can see by the low ratio today, industrials are lagging the broader market. Their performance relative to the S&P 500 has now fallen to its lowest level since mid-2024.
From all this data, we can conclude that the market is out on industrial stocks. That's music to my contrarian-investor ears.
Of course, the next step is finding the best way to invest in this opportunity...
You could do well betting on industrials with a sector fund like the State Street Industrial Select Sector SPDR Fund (XLI). But I think the better way to play this setup is to own the very best individual industrial names...
I'm talking about "Niche Fortress" stocks.
Avid Health & Wealth Bulletin readers may recognize these unique stocks from my May 13 essay.
To recap, here are the traits of a niche fortress company...
- It operates in a relatively small industrial market: This is key... The small market size will keep the biggest companies away.
- It has a leading position in its niche: It's a big player in this small market.
- Its margins are healthy: Without a dozen competitors undercutting it on price, it can maintain and raise prices.
- Its balance sheets are weatherproof: It's not burning cash to grow – it's generating it, and likely carries little debt.
- It has a history of growing its dividends every year: It's likely a "Dividend Aristocrat" – a company that has increased its dividend for at least 25 years in a row – or is close to earning that title.
No one notices niche fortress companies, but they're vital to the economy. They're AI-proof. And investing in them can make you rich over time.
As you can see, stocks in my "Niche Fortress Index" – which I created for Retirement Millionaire subscribers earlier this year – dominate the market in the long term...
Just a few months ago, my team and I introduced Retirement Millionaire subscribers to one of the best niche fortress industrial stocks we've ever come across...
It's a company that helps large factories do a job that is so specific, but so mission-critical, that it has very few competitors. That means it can raise prices year after year and return cash to shareholders.
This stock checks all the boxes above. And it's trading for an incredible price today.
Current Retirement Millionaire subscribers can read about the company here.
If you aren't yet subscribed to Retirement Millionaire but would like to learn more, click here.
What We're Reading...
- From May... "These Unloved, AI-Proof Stocks Crush the Market."
- For Retirement Millionaire subscribers, read this issue to hear about our other niche fortress holdings.
- Something different: Texas Governor Greg Abbott orders a data-center-permit halt weeks after issuing a moratorium.
Here's to our health, wealth, and a great retirement,
Dr. David Eifrig and the Health & Wealth Bulletin Research Team
September 23, 2026