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 Facing Headwinds

ENS Cover Image

Even if they go mostly unnoticed, industrial businesses are the backbone of our country. Unfortunately, this role also comes with a demand profile tethered to the ebbs and flows of the broader economy, and investors seem to be forecasting a downturn - over the past six months, the industry has pulled back by 11.2%. This performance was worse than the S&P 500’s 2.5% fall.

A cautious approach is imperative when dabbling in these companies as the losers can be left for dead when the cycle naturally turns and the winners consolidate. Keeping that in mind, here are three industrials stocks we’re passing on.

EnerSys (ENS)

Market Cap: $3.26 billion

Supplying batteries that power equipment as big as mining rigs, EnerSys (NYSE: ENS) manufactures various kinds of batteries for a range of industries.

Why Are We Wary of ENS?

  1. Declining unit sales over the past two years show it’s struggled to increase its sales volumes and had to rely on price increases
  2. Estimated sales growth of 1.6% for the next 12 months is soft and implies weaker demand
  3. Capital intensity has ramped up over the last five years as its free cash flow margin decreased by 5.8 percentage points

At $84.64 per share, EnerSys trades at 8.1x forward P/E. If you’re considering ENS for your portfolio, see our FREE research report to learn more.

Knight-Swift Transportation (KNX)

Market Cap: $7.09 billion

Covering 1.6 billion loaded miles in 2023 alone, Knight-Swift Transportation (NYSE: KNX) offers less-than-truckload and full truckload delivery services.

Why Are We Out on KNX?

  1. 1.2% annual revenue growth over the last two years was slower than its industrials peers
  2. Free cash flow margin shrank by 9.5 percentage points over the last five years, suggesting the company is consuming more capital to stay competitive
  3. Waning returns on capital from an already weak starting point displays the inefficacy of management’s past and current investment decisions

Knight-Swift Transportation is trading at $44.47 per share, or 22.3x forward P/E. Read our free research report to see why you should think twice about including KNX in your portfolio.

Johnson Controls (JCI)

Market Cap: $66.79 billion

Founded after patenting the electric room thermostat, Johnson Controls (NYSE: JCI) specializes in building products and technology solutions, including HVAC systems, fire and security systems, and energy storage.

Why Do We Think JCI Will Underperform?

  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. Anticipated sales growth of 3.8% for the next year implies demand will be shaky
  3. ROIC of 6.6% reflects management’s challenges in identifying attractive investment opportunities

Johnson Controls’s stock price of $103.53 implies a valuation ratio of 26.3x forward P/E. Dive into our free research report to see why there are better opportunities than JCI.

Stocks We Like More

Market indices reached historic highs following Donald Trump’s presidential victory in November 2024, but the outlook for 2025 is clouded by new trade policies that could impact business confidence and growth.

While this has caused many investors to adopt a "fearful" wait-and-see approach, we’re leaning into our best ideas that can grow regardless of the political or macroeconomic climate. Take advantage of Mr. Market 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 183% over the last five years (as of March 31st 2025).

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.

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