Even if they go mostly unnoticed, industrial businesses are the backbone of our country. But they are at the whim of volatile macroeconomic factors that influence capital spending (like interest rates), and the market seems convinced that demand will slow. Due to this bearish outlook, the industry has tumbled by 13% over the past six months. This drawdown was worse than the S&P 500’s 3.6% decline.

The elite companies can churn out earnings growth under any circumstance, however, and our mission at StockStory is to help you find them. Keeping that in mind, here is one industrials stock poised to generate sustainable market-beating returns and two best left ignored.

Two Industrials Stocks to Sell:

Apogee (APOG)

Market Cap: $834 million

Involved in the design of the Apple Store on Fifth Avenue in New York City, Apogee (NASDAQ: APOG) sells architectural products and services such as high-performance glass for commercial buildings.

Why Are We Cautious About APOG?

1. Products and services are facing end-market challenges during this cycle, as seen in its flat sales over the last five years
2. Demand will likely be weak over the next 12 months as Wall Street expects flat revenue
3. Capital intensity has ramped up over the last five years as its free cash flow margin decreased by 2.8 percentage points

Apogee’s stock price of $38.66 implies a valuation ratio of 9.1x forward P/E. Read our free research report to see why you should think twice about including APOG in your portfolio.

CSX (CSX)

Market Cap: $57.9 billion

Established as part of the Chessie System and Seaboard Coast Line Industries merger, CSX (NASDAQ: CSX) is a transportation company specializing in freight rail services.

Why Do We Pass on CSX?

1. Flat unit sales over the past two years imply it may need to invest in improvements to get back on track
2. Earnings per share decreased by more than its revenue over the last two years, showing each sale was less profitable
3. Free cash flow margin shrank by 15.6 percentage points over the last five years, suggesting the company is consuming more capital to stay competitive

At $30.83 per share, CSX trades at 16.8x forward P/E. To fully understand why you should be careful with CSX, check out our full research report (it’s free).

One Industrials Stock to Watch:

Allison Transmission (ALSN)

Market Cap: $8.62 billion

Helping build race cars at one point, Allison Transmission (NYSE: ALSN) offers transmissions to original equipment manufacturers and fleet operators.

Why Are We Positive On ALSN?

1. Offerings are mission-critical for businesses and result in a best-in-class gross margin of 47.7%
2. Highly efficient business model is illustrated by its impressive 28.8% operating margin, and its profits increased over the last five years as it scaled
3. Impressive free cash flow profitability enables the company to fund new investments or reward investors with share buybacks/dividends

Allison Transmission is trading at $102.34 per share, or 10x forward EV-to-EBITDA. Is now the time to initiate a position? See for yourself in our full research report, it’s free.

Stocks We Like Even More

Donald Trump’s victory in the 2024 U.S. Presidential Election sent major indices to all-time highs, but stocks have retraced as investors debate the health of the economy and the potential impact of tariffs.

While this leaves much uncertainty around 2025, a few companies are poised for long-term gains regardless of the political or macroeconomic climate, like 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 176% over the last five years.

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.