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 12.1% over the past six months. This drawdown was worse than the S&P 500’s 2.4% loss.

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. On that note, here are three industrials stocks best left ignored.

Alamo (ALG)

Market Cap: $2.39 billion

Expanding its markets through acquisitions since its founding, Alamo (NSYE:ALG) designs, manufactures, and services vegetation management and infrastructure maintenance equipment for governmental, industrial, and agricultural use.

Why Do We Avoid ALG?

1. Flat sales over the last two years suggest it must find different ways to grow during this cycle
2. Anticipated sales growth of 2.8% for the next year implies demand will be shaky
3. Earnings per share were flat over the last two years and fell short of the peer group average

At $198.04 per share, Alamo trades at 19.4x forward P/E. Check out our free in-depth research report to learn more about why ALG doesn’t pass our bar.

Mayville Engineering (MEC)

Market Cap: $322.5 million

Originally founded solely on tool and die manufacturing, Mayville Engineering Company (NYSE: MEC) specializes in metal fabrication, tube bending, and welding to be used in various industries.

Why Do We Think MEC Will Underperform?

1. Sales were flat over the last two years, indicating it’s failed to expand this cycle
2. High input costs result in an inferior gross margin of 12.5% that must be offset through higher volumes
3. Performance over the past five years was negatively impacted by new share issuances as its earnings per share were flat while its revenue grew

Mayville Engineering is trading at $15.76 per share, or 4.9x forward EV-to-EBITDA. If you’re considering MEC for your portfolio, see our FREE research report to learn more.

Matrix Service (MTRX)

Market Cap: $337.4 million

Founded in Oklahoma, Matrix Service (NASDAQ: MTRX) provides engineering, fabrication, construction, and maintenance services primarily to the energy and industrial markets.

Why Does MTRX Give Us Pause?

1. Sales tumbled by 10.7% annually over the last five years, showing market trends are working against its favor during this cycle
2. High input costs result in an inferior gross margin of 4.2% that must be offset through higher volumes
3. Earnings per share decreased by more than its revenue over the last five years, partly because it diluted shareholders

Matrix Service’s stock price of $12.22 implies a valuation ratio of 16.2x forward P/E. Dive into our free research report to see why there are better opportunities than MTRX.

Stocks We Like 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 9 Market-Beating Stocks. 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 Comfort Systems (+782% five-year return). Find your next big winner with StockStory today for free.