Even if they go mostly unnoticed, industrial businesses are the backbone of our country. 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 12.1% over the past six months. This drop was worse than the S&P 500’s 2.4% fall.
Despite the lackluster result, a few diamonds in the rough can produce earnings growth no matter what, and we started StockStory to help you find them. With that said, here are two industrials stocks boasting durable advantages and one we’re steering clear of.
One IndustrialsStock to Sell:
Sherwin-Williams (SHW)
Market Cap: $89.73 billion
Widely known for its success in the paint industry, Sherwin-Williams (NYSE: SHW) is a manufacturer of paints, coatings, and related products.
Why Are We Cautious About SHW?
- Organic revenue growth fell short of our benchmarks over the past two years and implies it may need to improve its products, pricing, or go-to-market strategy
- Anticipated sales growth of 2.5% for the next year implies demand will be shaky
- Free cash flow margin shrank by 8.5 percentage points over the last five years, suggesting the company is consuming more capital to stay competitive
At $357 per share, Sherwin-Williams trades at 29.2x forward P/E. If you’re considering SHW for your portfolio, see our FREE research report to learn more.
Two Industrials Stocks to Watch:
HEICO (HEI)
Market Cap: $36.32 billion
Founded in 1957, HEICO (NYSE: HEI) manufactures and services aerospace and electronic components for commercial aviation, defense, space, and other industries.
Why Is HEI a Good Business?
- Average organic revenue growth of 9.6% over the past two years demonstrates its ability to expand independently without relying on acquisitions
- Earnings per share grew by 41.6% annually over the last two years, massively outpacing its peers
- Impressive free cash flow profitability enables the company to fund new investments or reward investors with share buybacks/dividends
HEICO is trading at $299.64 per share, or 64.3x forward P/E. Is now a good time to buy? Find out in our full research report, it’s free.
ITT (ITT)
Market Cap: $11.85 billion
Playing a crucial role in the development of the first transatlantic television transmission in 1956, ITT (NYSE: ITT) provides motion and fluid handling equipment for various industries
Why Should ITT Be on Your Watchlist?
- Operating margin expanded by 9.6 percentage points over the last five years as it scaled and became more efficient
- Share repurchases over the last two years enabled its annual earnings per share growth of 13.9% to outpace its revenue gains
- Stellar returns on capital showcase management’s ability to surface highly profitable business ventures, and its returns are climbing as it finds even more attractive growth opportunities
ITT’s stock price of $150.54 implies a valuation ratio of 23x forward P/E. Is now the right time to buy? See for yourself in our comprehensive research report, it’s free.
High-Quality Stocks for All Market Conditions
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 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-micro-cap company Tecnoglass (+1,754% five-year return). Find your next big winner with StockStory today for free.
