Whether you see them or not, industrials businesses play a crucial part in our daily activities. But their prominence also brings high exposure to the ups and downs of economic cycles. Luckily, the tide is turning in their favor as the industry’s 28.1% return over the past six months has topped the S&P 500 by 9.3 percentage points.
Nevertheless, investors must be mindful as the cycle can unexpectedly turn. When this inevitably happens, only the elite companies will survive and ultimately thrive. With that said, here is one industrials stock poised to generate sustainable market-beating returns and two that may face trouble.
Two Industrials Stocks to Sell:
RTX (RTX)
Market Cap: $224 billion
Originally focused on refrigeration technology, Raytheon (NSYE:RTX) provides a a variety of products and services to the aerospace and defense industries.
Why Does RTX Give Us Pause?
- Estimated sales growth of 4.8% for the next 12 months implies demand will slow from its two-year trend
- Earnings growth over the last five years fell short of the peer group average as its EPS only increased by 4.8% annually
- Below-average returns on capital indicate management struggled to find compelling investment opportunities
At $167.50 per share, RTX trades at 27.1x forward P/E. Read our free research report to see why you should think twice about including RTX in your portfolio.
D.R. Horton (DHI)
Market Cap: $50.52 billion
One of the largest homebuilding companies in the U.S., D.R. Horton (NYSE: DHI) builds a variety of new construction homes across multiple markets.
Why Do We Think Twice About DHI?
- Backlog has dropped by 17% on average over the past two years, suggesting it’s losing orders as competition picks up
- Falling earnings per share over the last two years has some investors worried as stock prices ultimately follow EPS over the long term
- Eroding returns on capital suggest its historical profit centers are aging
D.R. Horton’s stock price of $169.43 implies a valuation ratio of 14.3x forward P/E. Dive into our free research report to see why there are better opportunities than DHI.
One Industrials Stock to Buy:
Blue Bird (BLBD)
Market Cap: $1.82 billion
With around a century of experience, Blue Bird (NASDAQ: BLBD) is a manufacturer of school buses and complementary parts.
Why Is BLBD a Top Pick?
- Market share has increased this cycle as its 14.3% annual revenue growth over the last two years was exceptional
- Additional sales over the last two years increased its profitability as the 317% annual growth in its earnings per share outpaced its revenue
- Returns on capital are climbing as management makes more lucrative bets
Blue Bird is trading at $57.98 per share, or 14.1x forward P/E. Is now the right time to buy? See for yourself in our full research report, it’s free.
Stocks We Like Even More
When Trump unveiled his aggressive tariff plan in April 2025, markets tanked as investors feared a full-blown trade war. But those who panicked and sold missed the subsequent rebound that’s already erased most losses.
Don’t let fear keep you from great opportunities and take a look at Top 6 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-small-cap company Comfort Systems (+782% five-year return). Find your next big winner with StockStory today for free. Find your next big winner with StockStory today. Find your next big winner with StockStory today
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