Whether you see them or not, industrials businesses play a crucial part in our daily activities. Unfortunately, this role also comes with a demand profile tethered to the ebbs and flows of the broader economy. The market seems to be debating where we are in the cycle as the industrials stocks were flat over the past six months. At the same time, the S&P 500 rose by 4.1%.

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 are two industrials stocks we think can generate sustainable market-beating returns and one we’re swiping left on.

One IndustrialsStock to Sell:

AGCO (AGCO)

Market Cap: $8.04 billion

With a history that features both organic growth and acquisitions, AGCO (NYSE: AGCO) designs, manufactures, and sells agricultural machinery and related technology.

Why Is AGCO Risky?

1. 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
2. Earnings per share fell by 46.7% annually over the last five years while its revenue grew, showing its incremental sales were much less profitable
3. Shrinking returns on capital suggest that increasing competition is eating into the company’s profitability

AGCO is trading at $107.72 per share, or 22.8x forward P/E. To fully understand why you should be careful with AGCO, check out our full research report (it’s free).

Two Industrials Stocks to Watch:

Herc (HRI)

Market Cap: $3.91 billion

Formerly a subsidiary of Hertz Corporation and with a logo that still bears some similarities to its former parent, Herc Holdings (NYSE: HRI) provides equipment rental and related services to a wide range of industries.

Why Does HRI Stand Out?

1. Annual revenue growth of 13.1% over the last five years was superb and indicates its market share increased during this cycle
2. Disciplined cost controls and effective management resulted in a strong long-term operating margin of 18.5%, and it turbocharged its profits by achieving some fixed cost leverage
3. Share repurchases have amplified shareholder returns as its annual earnings per share growth of 26.5% exceeded its revenue gains over the last five years

At $137.01 per share, Herc trades at 10.6x forward P/E. Is now the right time to buy? See for yourself in our comprehensive research report, it’s free.

Verra Mobility (VRRM)

Market Cap: $3.96 billion

Aiming to wrap technology and data around a historically manual and paper-based industry, Verra Mobility (NYSE: VRRM) is a leading provider of smart mobility technology to address tolls and violations, title and registration services, as well as safety and traffic enforcement.

Why Is VRRM a Good Business?

1. Annual revenue growth of 13.8% over the last five years was superb and indicates its market share increased during this cycle
2. Superior product capabilities and pricing power result in a best-in-class gross margin of 62.1%
3. Strong free cash flow margin of 20% enables it to reinvest or return capital consistently, and its rising cash conversion increases its margin of safety

Verra Mobility’s stock price of $24.87 implies a valuation ratio of 18.3x forward P/E. Is now the time to initiate a position? Find out in our full research report, it’s free.

Stocks We Like Even More

Donald Trump’s April 2024 "Liberation Day" tariffs sent markets into a tailspin, but stocks have since rebounded strongly, proving that knee-jerk reactions often create the best buying opportunities.

The smart money is already positioning for the next leg up. Don’t miss out on the recovery - check 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. Find your next big winner with StockStory today. Find your next big winner with StockStory today

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