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 6.6% over the past six months. This performance was worse than the S&P 500’s 1% fall.

The elite companies can churn out earnings growth under any circumstance, however, and our mission at StockStory is to help you find them. On that note, here is one resilient industrials stock at the top of our wish list and two we’re passing on.

Two Industrials Stocks to Sell:

Sunrun (RUN)

Market Cap: $2.72 billion

Helping homeowners use solar energy to power their homes, Sunrun (NASDAQ: RUN) provides residential solar electricity, specializing in panel installation and leasing services.

Why Does RUN Give Us Pause?

1. Customers postponed purchases of its products and services this cycle as its revenue declined by 7.1% annually over the last two years
2. Shrinking returns on capital from an already weak position reveal that neither previous nor ongoing investments are yielding the desired results
3. Unfavorable liquidity position could lead to additional equity financing that dilutes shareholders

Sunrun’s stock price of $11.90 implies a valuation ratio of 17x forward EV-to-EBITDA. To fully understand why you should be careful with RUN, check out our full research report (it’s free).

First Solar (FSLR)

Market Cap: $20.55 billion

Headquartered in Arizona, First Solar (NASDAQ: FSLR) specializes in manufacturing solar panels and providing photovoltaic solar energy solutions.

Why Is FSLR Not Exciting?

1. Annual revenue growth of 6.8% over the last five years was below our standards for the industrials sector
2. Free cash flow margin dropped by 18.5 percentage points over the last five years, implying the company increased its investment activities to fend off competitors
3. Short cash runway increases the probability of a capital raise that dilutes existing shareholders

First Solar is trading at $191.99 per share, or 9.5x forward P/E. Check out our free in-depth research report to learn more about why FSLR doesn’t pass our bar.

One Industrials Stock to Watch:

Karat Packaging (KRT)

Market Cap: $606.5 million

Founded as Lollicup, Karat Packaging (NASDAQ: KRT) distributes and manufactures environmentally-friendly disposable foodservice packaging solutions.

Why Could KRT Be a Winner?

1. Solid gross margin and unit economics free up capital for marketing and product development efforts
2. Free cash flow margin increased by 16.2 percentage points over the last five years, giving the company more capital to invest or return to shareholders
3. Industry-leading 15.8% return on capital demonstrates management’s skill in finding high-return investments

At $30.27 per share, Karat Packaging trades at 11.1x forward EV-to-EBITDA. Is now a good time to buy? See for yourself in our full research report, it’s free.

Stocks We Like Even More

Donald Trump’s victory in the 2024 U.S. Presidential Election sent major indices to all-time highs, but stocks have retraced as investors debate the health of the economy and the potential impact of tariffs.

While this leaves much uncertainty around 2025, a few companies are poised for long-term gains regardless of the political or macroeconomic climate, like our Top 6 Stocks for this week. This is a curated list of our High Quality stocks that have generated a market-beating return of 176% over the last five years.

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.