Industrials businesses quietly power the physical things we depend on, from cars and homes to e-commerce infrastructure. Unfortunately, this role also comes with a demand profile tethered to the ebbs and flows of the broader economy, and the industry is currently lagging as its six-month return of 6% has trailed the S&P 500’s 9.3% gain.

The elite companies can churn out earnings growth under any circumstance, however, and our mission at StockStory is to help you find them. On that note, here is one resilient industrials stock at the top of our wish list and two we’re swiping left on.

Two Industrials Stocks to Sell:

Woodward (WWD)

Market Cap: $11.33 billion

Initially designing controls for water wheels in the early 1900s, Woodward (NASDAQ: WWD) designs, services, and manufactures energy control products and optimization solutions.

Why Does WWD Worry Us?

1. Annual revenue growth of 2.2% over the last five years was below our standards for the industrials sector
2. Earnings growth underperformed the sector average over the last five years as its EPS grew by just 3.7% annually
3. Capital intensity has ramped up over the last five years as its free cash flow margin decreased by 8.4 percentage points

At $186 per share, Woodward trades at 28.9x forward price-to-earnings. Check out our free in-depth research report to learn more about why WWD doesn’t pass our bar.

Stratasys (SSYS)

Market Cap: $825.2 million

Born from the Founder’s idea of making a toy frog with a glue gun, Stratasys (NASDAQ: SSYS) offers 3D printers and related materials, software, and services to many industries.

Why Do We Think SSYS Will Underperform?

1. Customers postponed purchases of its products and services this cycle as its revenue declined by 2.4% annually over the last five years
2. Issuance of new shares over the last five years caused its earnings per share to fall by 15.4% annually, even worse than its revenue declines
3. Cash-burning history makes us doubt the long-term viability of its business model

Stratasys’s stock price of $11.99 implies a valuation ratio of 43.9x forward price-to-earnings. If you’re considering SSYS for your portfolio, see our FREE research report to learn more.

One Industrials Stock to Watch:

Lennox (LII)

Market Cap: $21.66 billion

Based in Texas and founded over a century ago, Lennox (NYSE: LII) is a climate control solutions company offering heating, ventilation, air conditioning, and refrigeration (HVACR) goods.

Why Should LII Be on Your Watchlist?

1. Operating margin improvement of 6.2 percentage points over the last five years demonstrates its ability to scale efficiently
2. Earnings growth has massively outpaced its peers over the last two years as its EPS has compounded at 26.1% annually
3. Stellar returns on capital showcase management’s ability to surface highly profitable business ventures

Lennox is trading at $623.60 per share, or 26.8x forward price-to-earnings. Is now a good time to buy? Find out in our full research report, it’s free.

Stocks We Like Even More

The elections are now behind us. With rates dropping and inflation cooling, many analysts expect a breakout market - and we’re zeroing in on the stocks that could benefit immensely.

Take advantage of the rebound 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 175% over the last five years.

Stocks that made our list in 2019 include now familiar names such as Nvidia (+2,183% between December 2019 and December 2024) as well as under-the-radar businesses like Axon (+711% five-year return). Find your next big winner with StockStory today for free.