Industrials businesses quietly power the physical things we depend on, from cars and homes to e-commerce infrastructure. But this role also comes with a demand profile tethered to the ebbs and flows of the broader economy. Thankfully, industrial end markets were stable over the past six months as the industry’s 6.3% gain has nearly mirrored the S&P 500.
Regardless of these results, investors should tread carefully. The diversity of companies in this space means that not all are created equal or well-positioned for the inescapable downturn. Keeping that in mind, here is one industrials stock poised to generate sustainable market-beating returns and two best left ignored.
Two IndustrialsStocks to Sell:
Array (ARRY)
Market Cap: $1.12 billion
Going public in October 2020, Array (NASDAQ: ARRY) is a global manufacturer of ground-mounting tracking systems for utility and distributed generation solar energy projects.
Why Do We Think ARRY Will Underperform?
- Flat unit sales over the past two years imply it may need to invest in improvements to get back on track
- Negative free cash flow raises questions about the return timeline for its investments
- Eroding returns on capital from an already low base indicate that management’s recent investments are destroying value
At $7.40 per share, Array trades at 11.4x forward P/E. If you’re considering ARRY for your portfolio, see our FREE research report to learn more.
American Woodmark (AMWD)
Market Cap: $809.3 million
Starting as a small millwork shop, American Woodmark (NASDAQ: AMWD) is a cabinet manufacturing company that helps customers from inspiration to installation.
Why Should You Dump AMWD?
- Customers postponed purchases of its products and services this cycle as its revenue declined by 9% annually over the last two years
- Projected sales decline of 2.7% over the next 12 months indicates demand will continue deteriorating
- Earnings per share have dipped by 6.7% annually over the past two years, which is concerning because stock prices follow EPS over the long term
American Woodmark’s stock price of $55.80 implies a valuation ratio of 9x forward P/E. Check out our free in-depth research report to learn more about why AMWD doesn’t pass our bar.
One Industrials Stock to Buy:
EMCOR (EME)
Market Cap: $24.23 billion
Through its network of over 70 subsidiaries, EMCOR (NYSE: EME) provides electrical, mechanical, and building construction and services
Why Will EME Outperform?
- Impressive 14.8% annual revenue growth over the last two years indicates it’s winning market share this cycle
- Share repurchases over the last two years enabled its annual earnings per share growth of 57.7% to outpace its revenue gains
- Returns on capital are climbing as management makes more lucrative bets
EMCOR is trading at $542.14 per share, or 23.2x forward P/E. Is now a good 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 6 Stocks for this week. 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 Kadant (+351% 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
StockStory is growing and hiring equity analyst and marketing roles. Are you a 0 to 1 builder passionate about the markets and AI? See the open roles here.
