Even if they go mostly unnoticed, industrial businesses are the backbone of our country. But their prominence also brings high exposure to the ups and downs of economic cycles. Luckily, the tide is turning in their favor as the industry’s 36.5% return over the past six months has topped the S&P 500 by 12.6 percentage points.
Nevertheless, investors must be mindful as the cycle can unexpectedly turn. When this inevitably happens, only the elite companies will survive and ultimately thrive. On that note, here is one industrials stock boasting a durable advantage and two we’re passing on.
Two Industrials Stocks to Sell:
Graco (GGG)
Market Cap: $13.4 billion
Founded in 1926, Graco (NYSE: GGG) is an industrial company specializing in the development and manufacturing of fluid-handling systems and products.
Why Does GGG Give Us Pause?
- Sales were flat over the last two years, indicating it’s failed to expand this cycle
- Falling earnings per share over the last two years has some investors worried as stock prices ultimately follow EPS over the long term
- Eroding returns on capital suggest its historical profit centers are aging
Graco’s stock price of $80.80 implies a valuation ratio of 25.9x forward P/E. Check out our free in-depth research report to learn more about why GGG doesn’t pass our bar.
NN (NNBR)
Market Cap: $95.57 million
Formerly known as Nuturn, NN (NASDAQ: NNBR) provides metal components, bearings, and plastic and rubber components to the automotive, aerospace, medical, and industrial sectors.
Why Do We Steer Clear of NNBR?
- Customers postponed purchases of its products and services this cycle as its revenue declined by 7.4% annually over the last two years
- Earnings per share fell by 18.8% annually over the last five years while its revenue was flat, partly because it diluted shareholders
- Cash-burning tendencies make us wonder if it can sustainably generate shareholder value
NN is trading at $1.64 per share, or 25.2x forward P/E. Dive into our free research report to see why there are better opportunities than NNBR.
One Industrials Stock to Buy:
Aris Water (ARIS)
Market Cap: $775.6 million
Primarily serving the oil and gas industry, Aris Water (NYSE: ARIS) is a provider of water handling and recycling solutions.
Why Do We Love ARIS?
- Impressive 23.8% annual revenue growth over the last five years indicates it’s winning market share this cycle
- Performance over the past two years shows its incremental sales were extremely profitable, as its annual earnings per share growth of 56.2% outpaced its revenue gains
- Free cash flow margin increased by 38.4 percentage points over the last five years, giving the company more capital to invest or return to shareholders
At $23.60 per share, Aris Water trades at 1.7x trailing 12-month price-to-sales. Is now the time to initiate a position? Find out in our full research report, it’s free for active Edge members.
Stocks We Like Even More
When Trump unveiled his aggressive tariff plan in April 2025, markets tanked as investors feared a full-blown trade war. But those who panicked and sold missed the subsequent rebound that’s already erased most losses.
Don’t let fear keep you from great opportunities and take a look at Top 5 Growth Stocks for this month. 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. Find your next big winner with StockStory today. Find your next big winner with StockStory today
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