Even if they go mostly unnoticed, industrial businesses are the backbone of our country. But they are at the whim of volatile macroeconomic factors that influence capital spending (like interest rates), and the market seems convinced that demand will slow. Due to this bearish outlook, the industry has tumbled by 11.8% over the past six months. This performance was worse than the S&P 500’s 2.2% decline.
The elite companies can churn out earnings growth under any circumstance, however, and our mission at StockStory is to help you find them. Taking that into account, here is one resilient industrials stock at the top of our wish list and two best left ignored.
Two IndustrialsStocks to Sell:
Casella Waste Systems (CWST)
Market Cap: $7.32 billion
Starting with the founder picking up garbage with a pickup truck he purchased using savings from high school, Casella (NASDAQ: CWST) offers waste management services for businesses, residents, and the government.
Why Is CWST Not Exciting?
- Core business is underperforming as its organic revenue has disappointed over the past two years, suggesting it might need acquisitions to stimulate growth
- Expenses have increased as a percentage of revenue over the last five years as its operating margin fell by 4 percentage points
- Performance over the past two years was negatively impacted by new share issuances as its earnings per share were flat while its revenue grew
At $115 per share, Casella Waste Systems trades at 95.5x forward P/E. Read our free research report to see why you should think twice about including CWST in your portfolio.
Snap-on (SNA)
Market Cap: $16.86 billion
Founded in 1920, Snap-on (NYSE: SNA) is a global provider of tools, equipment, and diagnostics for various industries such as vehicle repair, aerospace, and the military.
Why Does SNA Give Us Pause?
- 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
- 6.3 percentage point decline in its free cash flow margin over the last five years reflects the company’s increased investments to defend its market position
- Diminishing returns on capital suggest its earlier profit pools are drying up
Snap-on’s stock price of $322.36 implies a valuation ratio of 16.1x forward P/E. Dive into our free research report to see why there are better opportunities than SNA.
One Industrials Stock to Watch:
Leonardo DRS (DRS)
Market Cap: $11.11 billion
Developing submarine detection systems for the U.S. Navy, Leonardo DRS (NASDAQ: DRS) is a provider of defense systems, electronics, and military support services.
Why Do We Watch DRS?
- Demand is greater than supply as the company’s 54.4% average backlog growth over the past two years shows it’s securing new contracts and accumulating more orders than it can fulfill
- Incremental sales significantly boosted profitability as its annual earnings per share growth of 17.5% over the last two years outstripped its revenue performance
- Free cash flow margin increased by 4.7 percentage points over the last five years, giving the company more capital to invest or return to shareholders
Leonardo DRS is trading at $41.68 per share, or 38.4x forward P/E. Is now a good time to buy? See for yourself in our comprehensive research report, it’s free.
Stocks We Like Even More
The market surged in 2024 and reached record highs after Donald Trump’s presidential victory in November, but questions about new economic policies are adding much uncertainty for 2025.
While the crowd speculates what might happen next, we’re homing in on the companies that can succeed regardless of the political or macroeconomic environment. Put yourself in the driver’s seat and build a durable portfolio 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-small-cap company Exlservice (+354% five-year return). Find your next big winner with StockStory today for free.
