Buy This, Not That: The Reshoring Boom Has a Clear Winner

Shah Gilani|May 28, 2025

The market’s two hottest sectors are battling for supremacy…

And while both communications and industrials are showing impressive relative strength, only one deserves your investment dollars right now.

From dividend yields to momentum indicators, see which sector ETF is positioned to break out to new highs… and which one might be running out of steam.

Click on the thumbnail below to get all the details in this week’s Buy This, Not That video.

Transcript

Hey, everybody.

Shah Gilani here with your weekly BTNT, as in Buy This, Not That.

A lot of you, more than a handful, have pointed out to me that in terms of relative strength, the two hottest sectors right now are communications and industrials.

Today’s battle of Buy This, Not That is going to be between XLC, which is the S&P 500 Communications Sector ETF, and XLI, the S&P 500 Industrials ETF.

I’m going to do this with the help of some charts because that’s the way you guys want to see it.

First up, we’re going to take a look at XLC.

As you can see here, relative strength is pretty strong. Really nice move up.

This is why I think you’re asking me: is the momentum going to continue, and which one has a chance of going higher?

XLC is not far from its all-time high here. XLC is trading at $101 and change. It is about 3.2% from its highs, which is pretty close.

The S&P 500, speaking of close to its highs, is about 3.7% away from its all-time highs.

The XLC is enjoying relatively strong performance, and on its own. This move from these April 7th lows to where we are now has XLC up about 22%.

Communications is a hot sector.

The largest holding in XLC is Meta (META), which accounts for approximately 14.5% of the portfolio. Google’s (GOOGL) north of 15%.

Actually, they have two tranches of Google, but if you add them together, they’re more than Meta.

Google is quite robust in terms of its contributions to XLC. Netflix (NFLX) is next at 7.57% of the holdings.

It’s got Take-Two (TTWO) in there. It’s got Charter Communications (CHTR) in there, Live Nation (LYV), and Electronic Arts (EA).

That’s the communications mix. Pretty good. It also has a yield – a dividend yield of 1% on XLC.

Looking pretty good, but not as good, I think, as XLI, the S&P 500 Industrials.

Again, relative strength: excellent. It appeared to be getting a little overbought.

I’ll give you the long and short of it.

XLI’s high back on November 27th of 2024 was $144.51.

It’s gotten really close. It’s literally almost pennies away from reaching that high again.

With XLC, we’re looking at 3%+ away from its high. We’ve had better performance on XLI.

What’s in XLI?

GE Aerospace (GE). The portfolio is a little more diversified.

If you like the big holdings in Google, then XLC is your go-to.

However, I prefer GE Aerospace at 5.36%. Uber (UBER) is 4.19% of the holdings. Raytheon (RTX) is 4.16%.

Caterpillar (CAT), Boeing (BA), and a whole bunch of others that make a lot of sense to me.

I think it’s better diversified.

If you prefer the concentration in a handful of stocks that pushes XLC versus a more diversified portfolio of smaller holdings across a wider spectrum of industrials, then XLI is for you.

We’ve gotten a little overbought down here.

However, as it remains only inches away from its all-time high, XLI is up 27.5% from its lows, compared to XLC, which is up 22%.

We’ve had greater momentum and movement, and part of that is the Trump bump.

We’re discussing industrials that are likely to benefit from reshoring.

We’ve got a number of things that will make sense for the industrials.

Besides all that, the industrials, XLI, have a slightly better yield. They actually pay a dividend yield of 1.34%. I’m going to go with XLI. It’s got better momentum.

I think, overall, we have a chance for the 50-day moving average to turn up above the 200-day if this kind of action continues.

That’ll bring in more money into XLI.

The industrials, I think, given the Trump bump, will likely continue to lead.

If I have to choose one or the other, I would buy XLI and not XLC.

That’s it for this week.

I’ll catch you guys next week.

Cheers, everybody.