As the European capital-goods sector moves toward 2026, analysts at Kepler Cheuvreux have pinpointed five companies they consider well placed to benefit from stabilizing cyclical demand. Their analysis emphasizes exposure to areas showing relative strength - electrification, electrical grids, power generation, data centers, aerospace and defense, and rail infrastructure - even as overall momentum remains uneven.
The research notes that while broad-based gains across the sector are limited, targeted pockets of growth exist. Kepler highlights firms that are leveraging those growth drivers while also navigating headwinds such as an uncertain industrial investment recovery and the risk of slower spending by technology companies.
Kepler's five EU capital-goods picks
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ABB Ltd (SIX:ABBN) - Kepler's analysts see ABB as having underappreciated long-term earnings potential tied to sustained demand for electrification, grid infrastructure and data centers. Those end-markets are expected to support forecast upgrades, underpinning a buy case as these sectors maintain strength entering 2026.
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GEA Group AG (ETR:G1AG) - Described as a quality small and mid-cap, GEA is noted for improving execution and tighter cost discipline. Kepler says these operational improvements are helping put GEA on a path to reach its 2030 margin targets earlier than originally planned, which supports an efficiency-driven growth narrative for investors.
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Halma PLC (LON:HLMA) - Halma is characterized as a high-quality compounder with a proven roll-up strategy and resilient niche end-markets. Those attributes are cited as drivers of steady growth and margin expansion, making the company appealing amid potential market volatility.
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Lagercrantz (ST:LAGRb) - Kepler points to Lagercrantz as a way to gain exposure to a cyclical recovery in industrial demand while retaining strong structural growth traits. Its decentralized acquisition model is credited with continued delivery, positioning the company to benefit from both near-term recovery and longer-term growth trends.
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Spirax (LON:SPX) - Spirax is flagged as nearing a 2026 inflection point, with analysts noting improving earnings momentum and valuation support. The firm’s outlook is linked to normalizing industrial activity and recovering margins, which could set up conditions for potential outperformance.
Kepler's note also highlights the broader macro backdrop. Inflation normalization combined with monetary policy easing is expected to provide support for these companies, particularly those with exposure to residential construction and industrial investment. Kepler qualifies that the recovery in these areas looks gradual but increasingly likely, which frames the timing and pace of any upside.
Investors should weigh the sector-specific tailwinds identified by Kepler against the acknowledged uncertainties in industrial capex recovery and potential tech-sector spending slowdowns. The research underscores selective opportunity rather than a blanket sector endorsement as 2026 approaches.