Whether you see them or not, industrials businesses play a crucial part in our daily activities. 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 13.5% over the past six months. This drawdown was worse than the S&P 500’s 7.5% fall.
A cautious approach is imperative when dabbling in these companies as the losers can be left for dead when the cycle naturally turns and the winners consolidate. With that said, here are three industrials stocks we’re swiping left on.
Belden (BDC)
Market Cap: $3.85 billion
With its enamel-coated copper wire used in WWI for the Allied forces, Belden (NYSE: BDC) designs, manufactures, and sells electronic components to various industries.
Why Does BDC Fall Short?
- Annual sales declines of 2.8% for the past two years show its products and services struggled to connect with the market during this cycle
- Flat earnings per share over the last two years underperformed the sector average
At $96.43 per share, Belden trades at 12.7x forward price-to-earnings. To fully understand why you should be careful with BDC, check out our full research report (it’s free).
Tutor Perini (TPC)
Market Cap: $1.08 billion
Known for constructing the Philadelphia Eagles’ Stadium, Tutor Perini (NYSE: TPC) is a civil and building construction company offering diversified general contracting and design-build services.
Why Do We Steer Clear of TPC?
- Sales were flat over the last five years, indicating it’s failed to expand this cycle
- Waning returns on capital from an already weak starting point displays the inefficacy of management’s past and current investment decisions
- Negative earnings profile makes it challenging to secure favorable financing terms from lenders
Tutor Perini is trading at $20.50 per share, or 12.8x forward price-to-earnings. Check out our free in-depth research report to learn more about why TPC doesn’t pass our bar.
Scorpio Tankers (STNG)
Market Cap: $1.62 billion
Operating one of the youngest fleets in the industry, Scorpio Tankers (NYSE: STNG) is an international provider of marine transportation services, specializing in the shipment of refined petroleum.
Why Is STNG Not Exciting?
- Sluggish trends in its total vessels suggest customers aren’t adopting its solutions as quickly as the company hoped
- Projected sales decline of 24.3% over the next 12 months indicates demand will continue deteriorating
- Earnings per share have contracted by 5.7% annually over the last two years, a headwind for returns as stock prices often echo long-term EPS performance
Scorpio Tankers’s stock price of $35.60 implies a valuation ratio of 4.9x forward price-to-earnings. Dive into our free research report to see why there are better opportunities than STNG.
Stocks We Like More
Market indices reached historic highs following Donald Trump’s presidential victory in November 2024, but the outlook for 2025 is clouded by new trade policies that could impact business confidence and growth.
While this has caused many investors to adopt a "fearful" wait-and-see approach, we’re leaning into our best ideas that can grow regardless of the political or macroeconomic climate. Take advantage of Mr. Market 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 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 Sterling Infrastructure (+1,096% five-year return). Find your next big winner with StockStory today for free.
