1 Industrials Stock with Solid Fundamentals and 2 Facing Challenges

October 02, 2025 at 00:37 AM EDT

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Industrials businesses quietly power the physical things we depend on, from cars and homes to e-commerce infrastructure. They are also bound to benefit from a friendlier regulatory environment with the Trump administration, and this excitement has led to a six-month gain of 26.8% for the sector - higher than the S&P 500’s 18.4% return.

Regardless of these results, investors should tread carefully. The diversity of companies in this space means that not all are created equal or well-positioned for the inescapable downturn. With that said, here is one industrials stock boasting a durable advantage and two we’re swiping left on.

Two Industrials Stocks to Sell:

ESAB (ESAB)

Market Cap: $6.76 billion

Having played a significant role in the construction of the iconic Sydney Opera House, ESAB (NYSE: ESAB) manufactures and sells welding and cutting equipment for numerous industries.

Why Do We Think ESAB Will Underperform?

Organic revenue growth fell short of our benchmarks over the past two years and implies it may need to improve its products, pricing, or go-to-market strategy
Earnings growth over the last four years fell short of the peer group average as its EPS only increased by 3.6% annually
4.6 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

At $111.41 per share, ESAB trades at 19.2x forward P/E. If you’re considering ESAB for your portfolio, see our FREE research report to learn more.

Johnson Controls (JCI)

Market Cap: $71.26 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 Are We Hesitant About JCI?

Core business is underperforming as its organic revenue has disappointed over the past two years, suggesting it might need acquisitions to stimulate growth
Earnings growth over the last two years fell short of the peer group average as its EPS only increased by 5% annually
Underwhelming 7.3% return on capital reflects management’s difficulties in finding profitable growth opportunities, and its decreasing returns suggest its historical profit centers are aging

Johnson Controls’s stock price of $111 implies a valuation ratio of 26x forward P/E. Dive into our free research report to see why there are better opportunities than JCI.

One Industrials Stock to Watch:

Parsons (PSN)

Market Cap: $9.10 billion

Delivering aerospace technology during the Cold War-era, Parsons (NYSE: PSN) offers engineering, construction, and cybersecurity solutions for the infrastructure and defense sectors.

Why Are We Positive On PSN?

Annual revenue growth of 18.4% over the last two years was superb and indicates its market share increased during this cycle
Share repurchases have amplified shareholder returns as its annual earnings per share growth of 26.7% exceeded its revenue gains over the last two years
Historical investments are beginning to pay off as its returns on capital are growing

Parsons is trading at $85.50 per share, or 25.8x forward P/E. Is now the right time to buy? See for yourself in our full research report, it’s free.

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