Analyst Spotlight: Industrials
September 2025, From the Field
Watch two short videos with Lee Sandquist, equity investment analyst
- Two themes he’s focused on in the industrials sector
- How he manages his sleeve of the U.S. Equity Research strategy
Two Secular Growth Themes
Lee shares insights on two secular growth themes he’s closely watching—the proliferation of large language models in real-world AI applications; and the potential for increased U.S. manufacturing and reshoring.
By nature, most of the companies within my coverage are cyclical industrial companies, with a through-cycle revenue or organic growth rate that closely mirrors industrial production or GDP. However, from time to time, certain companies can take advantage of secular growth trends, where that longer-term growth rate inflects positively, structurally. There are two secular growth themes that I’ve been particularly focused on over the last 18 months. So, number one, the proliferation of LLMs in real-world AI applications. Several of my companies are the picks and shovel providers who supply components to the chipmakers and to the data centers themselves. Number two, reshoring. Regardless of what happens with tariff negotiations, we are likely to end 2025 and beyond with a higher baseline level of tariffs. Combined with policies like bonus capex depreciation, the net result is likely to be increased U.S. manufacturing and reshoring.
Analyst Investment Process
Lee shares his approach to managing a sleeve of the U.S. Equity Research strategy.
The strategy provides analysts with a really, really unique opportunity to manage capital, something that I and my peers do not take lightly. The decision-making process within my sleeve is a natural extension of my work as an analyst. So I have one investment process. And the output of that process informs both my internal investment recommendations to the platform, and it also informs my positioning within my sleeve for the strategy. Finally, it also helps serve as a signaling tool for my peers within T. Rowe Price as it demonstrates where I have conviction and where or when my thesis might be changing. While turnover is pretty low, I am monitoring exposures and making sure positioning aligns with my investment process pretty much daily.
Lee Sandquist
Investment Analyst
Strategies to Consider
U.S. Equity Research ETF (TSPA)*
Seeks to create a portfolio with similar characteristics to the S&P 500 Stock Index® with the potential to provide excess returns
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