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Industrial stocks could be back on top soon, in part helped by tax reform. 

The sector has underperformed the broader S&P 500 by 400 basis points over the past year, even as global GDP growth has surprised to the upside, research firm Fundstrat says in a new note. Even more surprising is that the technology sector has pulled away strongly, despite the fact that industrials and technology typically move in tandem.

Even so, there's reason to be bullish on industrials moving into the end of the year - capital expenditures could soon be on the rise. Expected tax reform legislation could accelerate depreciation and, subsequently, capital spending. Plus, regional producers manufacturing index readings show that capex intentions have risen, Fundstrat noted.

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Return on equity for industrial names is now greater than 20% and continues to rise, Fundstrat said. A gain in return on equity suggests an increase in asset efficiency and more revenue per dollar invested.

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The reason industrials have underperformed is because many names "peculiarly" didn't respond to a weaker dollar, analysts asserted. "[General Electric Co.] (GE) - Get General Electric Company (GE) Report was another factor, as its underperformance accounted for 200 basis points of underperformance since early December 2016," analysts wrote. "But it is more than that. Trucking, Construction, Airlines and Building products lagged the S&P 500 badly-we see these same groups as potential areas for opportunity as long as they avoid margin pressures (labor, etc.)."

Fundstrat offered 21 ideas for industrial sector stocks to hold long as 2017 comes to a close.

Lockheed Martin Corp. (LMT) - Get Lockheed Martin Corporation (LMT) Report , 3M Co. (MMM) - Get 3M Company Report , Illinois Tool works Inc. (ITW) - Get Illinois Tool Works Inc. (ITW) Report , Emerson Electric Co. (EMR) - Get Emerson Electric Co. Report , United Parcel Service Inc. (UPS) - Get United Parcel Service, Inc. Class B Report , Raytheon Co. (RTN) - Get Raytheon Company Report  and JB Hunt Transport Services Inc. (JBHT) - Get J.B. Hunt Transport Services, Inc. (JBHT) Report .

Also, Union Pacific Corp. (UNP) - Get Union Pacific Corporation Report , FedEx Corp. (FDX) - Get FedEx Corporation Report , Cummins Inc. (CMI) - Get Cummins Inc. Report , Boeing Co. (BA) - Get Boeing Company Report , Rockwell Automation (ROK) - Get Rockwell Automation, Inc. Report , Kansas City Southern (KSU) - Get Kansas City Southern (KSU) Report  and Northrop Grumman Corp. (NOC) - Get Northrop Grumman Corporation Report .

Plus WW Grainger Inc. (GWW) - Get W.W. Grainger, Inc. Report , Norfolk Southern Corp. (NSC) - Get Norfolk Southern Corporation Report , General Dynamics Corp. (GD) - Get General Dynamics Corporation (GD) Report , L3 Technologies Inc. (LLL) - Get L3 Technologies Inc Report , Deere & Co. (DE) - Get Deere & Company Report , Honeywell International Inc. (HON) - Get Honeywell International Inc. (HON) Report , and Waste Management Inc. (WM) - Get Waste Management, Inc. Report .

General Electric, Illinois Tool Works and Waste Management are holdings in Jim Cramer's Action Alerts PLUS Charitable Trust Portfolio. Want to be alerted before Cramer buys or sells the stocks? Learn more now.

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