Industrials businesses quietly power the physical things we depend on, from cars and homes to e-commerce infrastructure. Still, their generally high capital requirements expose them to the ups and downs of economic cycles, and the market seems to be baking in a prolonged downturn as the industry has shed 8.6% over the past six months. This drop was worse than the S&P 500’s 1.6% loss.
Despite the lackluster result, a few diamonds in the rough can produce earnings growth no matter what, and we started StockStory to help you find them. Taking that into account, here are two industrials stocks we think can generate sustainable market-beating returns and one we’re steering clear of.
One Industrials Stock to Sell:
Vontier (VNT)
Market Cap: $4.99 billion
A spin-off of a spin-off, Vontier (NYSE: VNT) provides electronic products and systems to the transportation, automotive, and manufacturing sectors.
Why Should You Sell VNT?
- Organic sales performance over the past two years indicates the company may need to make strategic adjustments or rely on M&A to catalyze faster growth
- Free cash flow margin shrank by 12.7 percentage points over the last five years, suggesting the company is consuming more capital to stay competitive
- Waning returns on capital imply its previous profit engines are losing steam
Vontier’s stock price of $33.92 implies a valuation ratio of 10.7x forward price-to-earnings. If you’re considering VNT for your portfolio, see our FREE research report to learn more.
Two Industrials Stocks to Buy:
Byrna (BYRN)
Market Cap: $404.9 million
Providing civilians with tools to disable, disarm, and deter would-be assailants, Byrna (NASDAQ: BYRN) is a provider of non-lethal weapons.
Why Are We Backing BYRN?
- Annual revenue growth of 33.6% over the last two years was superb and indicates its market share increased during this cycle
- Operating profits and efficiency rose over the last five years as it benefited from some fixed cost leverage
- Incremental sales significantly boosted profitability as its annual earnings per share growth of 88.2% over the last two years outstripped its revenue performance
Byrna is trading at $18.39 per share, or 63.8x forward price-to-earnings. Is now the right time to buy? Find out in our full research report, it’s free.
Chart (GTLS)
Market Cap: $6.90 billion
Installing the first bulk Co2 tank for McDonalds’s sodas, Chart (NYSE: GTLS) provides equipment to store and transport gasses.
Why Should You Buy GTLS?
- Average backlog growth of 60.1% over the past two years shows it has a steady sales pipeline that will drive future orders
- Operating margin improvement of 7.7 percentage points over the last five years demonstrates its ability to scale efficiently
- Earnings per share have massively outperformed its peers over the last two years, increasing by 42.9% annually
At $152.91 per share, Chart trades at 12.4x forward price-to-earnings. Is now the time to initiate a position? See for yourself in our comprehensive research report, it’s free.
Stocks We Like Even More
With rates dropping, inflation stabilizing, and the elections in the rearview mirror, all signs point to the start of a new bull run - and we’re laser-focused on finding the best stocks for this upcoming cycle.
Put yourself in the driver’s seat by checking out our Top 9 Market-Beating Stocks. This is a curated list of our High Quality stocks that have generated a market-beating return of 175% over the last five years.
Stocks that made our list in 2019 include now familiar names such as Nvidia (+2,183% between December 2019 and December 2024) as well as under-the-radar businesses like Axon (+711% five-year return). Find your next big winner with StockStory today for free.
