Industrials businesses quietly power the physical things we depend on, from cars and homes to e-commerce infrastructure. 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 11.2% over the past six months. This drawdown was worse than the S&P 500’s 5.6% loss.

Only some companies are subject to these dynamics, however, and a handful of high-quality businesses can deliver earnings growth in any environment. With that said, here is one resilient industrials stock at the top of our wish list and two we’re passing on.

Two Industrials Stocks to Sell:

Middleby (MIDD)

Market Cap: $7.01 billion

Holding a Guinness World Record for creating the world’s fastest conveyor pizza oven, Middleby (NYSE: MIDD) is a food service and equipment manufacturer.

Why Should You Dump MIDD?

1. Absence of organic revenue growth over the past two years suggests it may have to lean into acquisitions to drive its expansion
2. Earnings growth over the last two years fell short of the peer group average as its EPS only increased by 2.3% annually
3. Capital intensity has ramped up over the last five years as its free cash flow margin decreased by 3 percentage points

At $131.39 per share, Middleby trades at 12.9x forward price-to-earnings. Read our free research report to see why you should think twice about including MIDD in your portfolio.

Matson (MATX)

Market Cap: $3.50 billion

Founded by a Swedish orphan, Matson (NYSE: MATX) is a provider of ocean transportation and logistics services.

Why Does MATX Give Us Pause?

1. Customers postponed purchases of its products and services this cycle as its revenue declined by 11.2% annually over the last two years
2. Falling earnings per share over the last two years has some investors worried as stock prices ultimately follow EPS over the long term
3. Diminishing returns on capital suggest its earlier profit pools are drying up

Matson is trading at $108 per share, or 10.4x forward price-to-earnings. To fully understand why you should be careful with MATX, check out our full research report (it’s free).

One Industrials Stock to Watch:

RBC Bearings (RBC)

Market Cap: $10.16 billion

With a Guinness World Record for engineering the largest spherical plain bearing, RBC Bearings (NYSE: RBC) is a manufacturer of bearings and related components for the aerospace & defense, industrial, and transportation industries.

Why Should RBC Be on Your Watchlist?

1. Annual revenue growth of 17.4% over the last five years was superb and indicates its market share increased during this cycle
2. Highly efficient business model is illustrated by its impressive 19.8% operating margin, and it turbocharged its profits by achieving some fixed cost leverage
3. Earnings growth has trumped its peers over the last two years as its EPS has compounded at 22.1% annually

RBC Bearings’s stock price of $325.25 implies a valuation ratio of 31x forward price-to-earnings. Is now the right time to buy? Find out in our full 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 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.