Industrials businesses quietly power the physical things we depend on, from cars and homes to e-commerce infrastructure. But their prominence also brings high exposure to the ups and downs of economic cycles. Luckily, the tide is turning in their favor as the industry’s 19.2% return over the past six months has topped the S&P 500 by 13 percentage points.

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 are three industrials stocks we’re swiping left on.

Otis (OTIS)

Market Cap: $34.95 billion

Credited with inventing the first hydraulic passenger elevator, Otis Worldwide (NYSE: OTIS) is an elevator and escalator manufacturing, installation and service company.

Why Are We Cautious About OTIS?

1. Core business is underperforming as its organic revenue has disappointed over the past two years, suggesting it might need acquisitions to stimulate growth
2. Projected sales growth of 5% for the next 12 months suggests sluggish demand
3. Earnings growth underperformed the sector average over the last two years as its EPS grew by just 7% annually

At $89.91 per share, Otis trades at 21x forward P/E. Dive into our free research report to see why there are better opportunities than OTIS.

General Motors (GM)

Market Cap: $73.48 billion

Founded in 1908 by William C. Durant, General Motors (NYSE: GM) offers a range of vehicles and automobiles through brands such as Chevrolet, Buick, GMC, and Cadillac.

Why Does GM Worry Us?

1. Declining unit sales over the past two years suggest it might have to lower prices to accelerate growth
2. Gross margin of 12.2% is below its competitors, leaving less money to invest in areas like marketing and R&D
3. Day-to-day expenses have swelled relative to revenue over the last five years as its operating margin fell by 5.8 percentage points

General Motors is trading at $81.34 per share, or 6.4x forward P/E. Read our free research report to see why you should think twice about including GM in your portfolio.

Douglas Dynamics (PLOW)

Market Cap: $1.02 billion

Once manufacturing snowplows designed for the iconic jeep vehicle precursor, Douglas Dynamics (NYSE: PLOW) offers snow and ice equipment for the roads and sidewalks.

Why Does PLOW Give Us Pause?

1. Sales trends were unexciting over the last five years as its 6.4% annual growth was below the typical industrials company
2. Competitive supply chain dynamics and steep production costs are reflected in its low gross margin of 25.4%
3. Diminishing returns on capital from an already low starting point show that neither management’s prior nor current bets are going as planned

Douglas Dynamics’s stock price of $44.88 implies a valuation ratio of 17x forward P/E. Check out our free in-depth research report to learn more about why PLOW doesn’t pass our bar.

Stocks We Like More

If your portfolio success hinges on just 4 stocks, your wealth is built on fragile ground. You have a small window to secure high-quality assets before the market widens and these prices disappear.

Don’t wait for the next volatility shock. 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 244% over the last five years (as of June 30, 2025).

Stocks that made our list in 2020 include now familiar names such as Nvidia (+1,326% between June 2020 and June 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.