Laser Focus World is an industry bedrock—first published in 1965 and still going strong. We publish original articles about cutting-edge advances in lasers, optics, photonics, sensors, and quantum technologies, as well as test and measurement, and the shift currently underway to usher in the photonic integrated circuits, optical interconnects, and copackaged electronics and photonics to deliver the speed and efficiency essential for data centers of the future.

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Editorial Advisory Board

  • Professor Andrea M. Armani, University of Southern California
  • Ruti Ben-Shlomi, Ph.D., LightSolver
  • James Butler, Ph.D., Hamamatsu
  • Natalie Fardian-Melamed, Ph.D., Columbia University
  • Justin Sigley, Ph.D., AmeriCOM
  • Professor Birgit Stiller, Max Planck Institute for the Science of Light, and Leibniz University of Hannover
  • Professor Stephen Sweeney, University of Glasgow
  • Mohan Wang, Ph.D., University of Oxford
  • Professor Xuchen Wang, Harbin Engineering University
  • Professor Stefan Witte, Delft University of Technology

3 Industrials Stocks Walking a Fine Line

ACM Cover Image

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 2% over the past six months. This drawdown was disappointing since the S&P 500 climbed 5.9%.

Investors should tread carefully as timing cyclical companies is a challenging task, and any misstep can have you catching a falling knife. With that said, here are three industrials stocks best left ignored.

AECOM (ACM)

Market Cap: $12.7 billion

Founded in 1990 when a group of engineers from five companies decided to merge, AECOM (NYSE: ACM) provides various infrastructure consulting services.

Why Is ACM Not Exciting?

  1. Sales pipeline suggests its future revenue growth likely won’t meet our standards as its backlog hasn’t budged over the past two years
  2. Gross margin of 6.3% is below its competitors, leaving less money to invest in areas like marketing and R&D
  3. Responsiveness to unforeseen market trends is restricted due to its substandard operating profitability

At $96.59 per share, AECOM trades at 18.5x forward price-to-earnings. If you’re considering ACM for your portfolio, see our FREE research report to learn more.

Ryder (R)

Market Cap: $6.72 billion

As one of the first companies to introduce the idea of leasing trucks, Ryder (NYSE: R) provides rental vehicles to businesses and delivers packages directly to homes or businesses.

Why Do We Avoid R?

  1. Annual sales growth of 2.6% over the last two years lagged behind its industrials peers as its large revenue base made it difficult to generate incremental demand
  2. Earnings per share have dipped by 14.2% annually over the past two years, which is concerning because stock prices follow EPS over the long term
  3. 15.6 percentage point decline in its free cash flow margin over the last five years reflects the company’s increased investments to defend its market position

Ryder’s stock price of $159.42 implies a valuation ratio of 11.8x forward price-to-earnings. To fully understand why you should be careful with R, check out our full research report (it’s free).

Northrop Grumman (NOC)

Market Cap: $65.13 billion

Responsible for the development of the first stealth bomber, Northrop Grumman (NYSE: NOC) specializes in providing aerospace, defense, and security solutions for various industry applications.

Why Should You Sell NOC?

  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. Annual earnings per share growth of 1% underperformed its revenue over the last two years, showing its incremental sales were less profitable
  3. Waning returns on capital imply its previous profit engines are losing steam

Northrop Grumman is trading at $457.73 per share, or 16x forward price-to-earnings. If you’re considering NOC for your portfolio, see our FREE research report to learn more.

Stocks We Like More

With rates dropping, inflation stabilizing, and the elections in the rearview mirror, all signs point to the start of a new bull run - and we’re laser-focused on finding the best stocks for this upcoming cycle.

Put yourself in the driver’s seat by checking out 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 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 United Rentals (+322% five-year return). Find your next big winner with StockStory today for free.

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