Valmont has had an impressive run over the past six months as its shares have beaten the S&P 500 by 14%. The stock now trades at $407.42, marking a 27.1% gain. This was partly thanks to its solid quarterly results, and the performance may have investors wondering how to approach the situation.

Is there a buying opportunity in Valmont, or does it present a risk to your portfolio? Get the full breakdown from our expert analysts, it’s free for active Edge members.

Why Is Valmont Not Exciting?

We’re glad investors have benefited from the price increase, but we're sitting this one out for now. Here are three reasons you should be careful with VMI and a stock we'd rather own.

1. Core Business Falling Behind as Demand Declines

We can better understand Building Materials companies by analyzing their organic revenue. This metric gives visibility into Valmont’s core business because it excludes one-time events such as mergers, acquisitions, and divestitures along with foreign currency fluctuations - non-fundamental factors that can manipulate the income statement.

Over the last two years, Valmont’s organic revenue averaged 1.8% year-on-year declines. This performance was underwhelming and implies it may need to improve its products, pricing, or go-to-market strategy. It also suggests Valmont might have to lean into acquisitions to grow, which isn’t ideal because M&A can be expensive and risky (integrations often disrupt focus).

2. Projected Revenue Growth Is Slim

Forecasted revenues by Wall Street analysts signal a company’s potential. Predictions may not always be accurate, but accelerating growth typically boosts valuation multiples and stock prices while slowing growth does the opposite.

Over the next 12 months, sell-side analysts expect Valmont’s revenue to rise by 2.7%. While this projection suggests its newer products and services will spur better top-line performance, it is still below average for the sector.

3. Low Gross Margin Hinders Flexibility

For industrials businesses, cost of sales is usually comprised of the direct labor, raw materials, and supplies needed to offer a product or service. These costs can be impacted by inflation and supply chain dynamics in the short term and a company’s purchasing power and scale over the long term.

Valmont’s gross margin is slightly below the average industrials company, giving it less room to invest in areas such as research and development. As you can see below, it averaged a 28.3% gross margin over the last five years. Said differently, Valmont had to pay a chunky $71.69 to its suppliers for every $100 in revenue.

Final Judgment

Valmont isn’t a terrible business, but it doesn’t pass our bar. With its shares beating the market recently, the stock trades at 19.3× forward P/E (or $407.42 per share). This valuation is reasonable, but the company’s shakier fundamentals present too much downside risk. We're fairly confident there are better investments elsewhere. We’d suggest looking at a fast-growing restaurant franchise with an A+ ranch dressing sauce.

Stocks We Like More Than Valmont

Your portfolio can’t afford to be based on yesterday’s story. The risk in a handful of heavily crowded stocks is rising daily.

The names generating the next wave of massive growth are right here in our Top 5 Strong Momentum Stocks for this week. 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 have made our list 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 Kadant (+351% five-year return). 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.