American and other airlines are gearing up to report earnings. Here’s how to play it

Industrial stocks have soared off the December lows, and two experts think the group could be ripe for more gains.

The XLI industrials ETF, which tracks the sector, was slightly lower on Wednesday despite strong earnings from United Technologies. As Wall Street gears up for a handful of other earnings over the next week, Andrew McOrmond of WallachBeth says it could be setting up for a bigger rally.

“I still think XLI is the right play,” he said Wednesday on CNBC’s “ETF Edge.” “It’s an absolute beast. It trades over 14 million shares a day and has 10 billion shares of AUM.”

The ETF’s biggest holding is Boeing; it includes other names such as Union Pacific and defense stocks such as Honeywell.

Within the industrials, McOrmond says, airlines are a good group to own. American, Southwest and Alaska are all set to report on Thursday, as the group has rallied 9 percent this year. All three are among the largest holdings in the global jets ETF, JETS, which also includes United and Delta.

“I think after Delta’s earnings on Jan. 15, JETS was able to stabilize as well as the airlines with the S&P 500,” said McOrmond.

But he stresses that individual names within the airlines space are also a good buy given that “there isn’t exposure to as much single stock risk.”

Tim Seymour of Seymour Asset Management also says there is still room to get in on industrials but investors should be aware of the individual names in XLI and the fundamentals that could move them.

“If you think about the economy and that part of the investment landscape, people have been very concerned over the last few months,” he said Wednesday on “ETF Edge.” “You can argue that [the sector is] right in the center here, and yet a name like Boeing to me is very defensive in this current trade war spat [with free cash flow]. So again, know what you own.”

Seymour says airlines could be set to soar. “Delta and United, even before they gave their numbers they had actually guided lower. I think we got a lot of the bad news out.”

Industrials are up 6 percent this year so far, even with Wednesday’s reversal.