Investors appear to be attracted to the more reasonable valuations offered by industrial shares compared to the frothy multiples found on biotech and Internet names. “Machinery producers and shipping companies are trading at 18.2 times reported earnings. While that’s near the highest level since 2011, it’s a fraction of the multiple for Internet stocks, which stands at 89.2,” according to Bloomberg.
Adding the P/E ratios on XLI and IYT results in a number close to 38, still well below the P/E of 44.1 found on the iShares Nasdaq Biotechnology ETF(NasdaqGM: IBB), the largest biotech ETF.
Industrial Select Sector SPDR