Even if they go mostly unnoticed, industrial businesses are the backbone of our country. Sure, they are at the whim of macroeconomic factors that influence capital spending (like interest rates), but the industry has held its ground over the past six months as its 5.2% return was almost identical to the S&P 500.
Although these companies have produced results lately, a cautious approach is imperative. When the cycle naturally turns, the losers can be left for dead while the winners consolidate and take more of the market. With that said, here is one industrials stock poised to generate sustainable market-beating returns and two best left ignored.
Two IndustrialsStocks to Sell:
Kimball Electronics (KE)
Market Cap: $455.2 million
Founded in 1961, Kimball Electronics (NYSE: KE) is a global contract manufacturer specializing in electronics and manufacturing solutions for automotive, medical, and industrial markets.
Why Are We Out on KE?
- Products and services are facing significant end-market challenges during this cycle as sales have declined by 5% annually over the last two years
- Earnings per share have dipped by 13.7% annually over the past four years, which is concerning because stock prices follow EPS over the long term
- Lacking free cash flow generation means it has few chances to reinvest for growth, repurchase shares, or distribute capital
Kimball Electronics’s stock price of $18.67 implies a valuation ratio of 17.4x forward P/E. Check out our free in-depth research report to learn more about why KE doesn’t pass our bar.
Matrix Service (MTRX)
Market Cap: $423.5 million
Founded in Oklahoma, Matrix Service (NASDAQ: MTRX) provides engineering, fabrication, construction, and maintenance services primarily to the energy and industrial markets.
Why Is MTRX Not Exciting?
- Sales tumbled by 10.7% annually over the last five years, showing market trends are working against its favor during this cycle
- Gross margin of 4.2% reflects its high production costs
- Issuance of new shares over the last five years caused its earnings per share to fall by 29.7% annually, even worse than its revenue declines
Matrix Service is trading at $15.34 per share, or 20.3x forward P/E. Dive into our free research report to see why there are better opportunities than MTRX.
One Industrials Stock to Watch:
Astronics (ATRO)
Market Cap: $1.22 billion
Integrating power outlets into many Boeing aircraft, Astronics (NASDAQ: ATRO) is a provider of technologies and services to the global aerospace, defense, and electronics industries.
Why Could ATRO Be a Winner?
- Annual revenue growth of 19.1% over the past two years was outstanding, reflecting market share gains this cycle
- Incremental sales over the last two years have been highly profitable as its earnings per share increased by 81.3% annually, topping its revenue gains
- Rising returns on capital show the company is starting to reap the benefits of its past investments
At $33.81 per share, Astronics trades at 22.5x forward P/E. Is now a good time to buy? Find out in our full research report, it’s free.
Stocks We Like Even More
Trump’s April 2025 tariff bombshell triggered a massive market selloff, but stocks have since staged an impressive recovery, leaving those who panic sold on the sidelines.
Take advantage of the rebound by checking out our Top 5 Strong Momentum Stocks for this week. This is a curated list of our High Quality stocks that have generated a market-beating return of 183% over the last five years (as of March 31st 2025).
Stocks that made our list in 2020 include now familiar names such as Nvidia (+1,545% between March 2020 and March 2025) as well as under-the-radar businesses like the once-micro-cap company Kadant (+351% five-year return). Find your next big winner with StockStory today for free.
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