According to Bespoke Investment Group, the Dow Jones Industrial Average has gained, on average, 2.6% in April for the last 20 years.

And April is off to a slow start, thus far.

Month to date, the Dow has gained just 0.95%.

[ad#Google Adsense 336×280-IA]Profit-taking after a strong month in March as well as earnings uncertainty are behind the recent pullback.

One overlooked sector, however, is breaking out big time – and I’ve got the perfect way to play the upside.

The Industrial Revolution

Industrial stocks have been punished in the wake of a two-year commodities rout.

But the weakening dollar and falling crude oil production have both provided a major boost to the sector.

Rocked by volatility in the financial markets, investors are piling into gold – a traditional safe-haven play.

Further, oil producers are positioning for price recovery in 2017 and beyond.

As a result, Brent crude and gold are up more than 20% on the year.

Burgeoning strength in the commodities markets has helped the Industrial Select Sector SPDR Fund (XLI) to break a 10-month downtrend.

The XLI is now up 5% on the year, compared to the 1% gain in the S&P 500.

Even more impressive, industrial stocks have gained 16% off their January lows – beating the market by more than 5%.

And a closer look at the sector reveals an even juicier opportunity.

Overlooked and Undervalued

Fluor Corp. (FLR) is a global engineering and construction firm.

Founded in 1912 in Irving, Texas, the company provides industrial services to governmental and private sector clients in 32 countries.

For the last 10 years, Fluor has been a consistent outperformer in the sector and in the broader U.S. stock market.

Its shares more than doubled between 2006 and 2008. And, despite tanking along with the rest of the market during the Great Recession, Fluor made up most of its lost ground in the bull market that followed.

That is, until the Great Oil Bust of 2014.

The majority of Fluor’s business comes from the oil and gas industry, and the oil bust hit them hard.

Since 2013, annual earnings per share have dropped 29%, and revenue has declined more than 33%.

Because of this, Fluor now trades at an eye-catching valuation, with much of its oil exposure priced in the shares.

At 18 times trailing earnings, the stock is trading at a 21% discount to its 10-year average.

The company is also sporting a price-to-sales ratio of 0.4, and a price-to-cash-flow ratio of just 9.11 – a discount to the industry average of almost 20%.

The fundamentals look good, but here’s why you should like Fluor right now…

Up off the Fluor

Since hitting its five-year high on January 22, 2014, its shares have come under heavy pressure – from the 2014 peak to its current 52-week low, the stock has fallen more than 50%.

But over the last few months, Fluor has quietly staged a convincing comeback.

First of all, Fluor’s chart has produced a strong double bottom pattern extending back to July. As you may know, the double bottom is one of the most bullish technical chart patterns out there.

Traders also love this pattern because it’s one of the easiest to spot and trade effectively.

In February, the shares broke through the fierce downtrend on more than double the average daily volume. The trend line breaks on increased volume have given traders the confidence that a new trend will hold.

The stock also broke above its 200-day moving average (DMA) for the first time since July 2014.

In fact, Fluor’s 50-DMA crossed above its 200-DMA for the first time since October 2012 – and this moving average cross-over, known as a “golden” cross, is incredibly bullish.

But the stock’s most bullish technical condition occurred last week.

As you can see in the chart above, the shares also took out key resistance at $51 in late March. And last Thursday, Fluor found strong support along that resistance.

Why is this so important?

Well, for technical traders, seeing is believing. And when prior resistance becomes support, the demand for shares jumps as new buyers come off the sidelines on proven strength.

Fluor represents a huge bargain in one of the market’s hottest sectors.

If you missed energy’s early year gains, here’s your chance to position yourself ahead of oil’s eventual recovery.

On the hunt,

Jonathan Rodriguez

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Source: Wall Street Daily