Industrials businesses quietly power the physical things we depend on, from cars and homes to e-commerce infrastructure. 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 18.4% return over the past six months has topped the S&P 500 by 5 percentage points.
Although these companies have produced results lately, a cautious approach is imperative. When the cycle naturally turns, the losers can be left for dead while the winners consolidate and take more of the market. On that note, here is one industrials stock poised to generate sustainable market-beating returns and two we’re swiping left on.
Two Industrials Stocks to Sell:
Otis (OTIS)
Market Cap: $34 billion
Credited with inventing the first hydraulic passenger elevator, Otis Worldwide (NYSE: OTIS) is an elevator and escalator manufacturing, installation and service company.
Why Is OTIS Not Exciting?
- 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
- Estimated sales growth of 5% for the next 12 months is soft and implies weaker demand
- Capital intensity has ramped up over the last five years as its free cash flow margin decreased by 2.1 percentage points
Otis’s stock price of $87.38 implies a valuation ratio of 20.3x forward P/E. To fully understand why you should be careful with OTIS, check out our full research report (it’s free for active Edge members).
ChargePoint (CHPT)
Market Cap: $172.7 million
The most prominent EV charging company during the COVID bull market, ChargePoint (NYSE: CHPT) is a provider of electric vehicle charging technology solutions in North America and Europe.
Why Does CHPT Worry Us?
- Products and services are facing significant end-market challenges during this cycle as sales have declined by 13.8% annually over the last two years
- Cash-burning history makes us doubt the long-term viability of its business model
- EBITDA losses may force it to accept punitive lending terms or high-cost debt
ChargePoint is trading at $7.32 per share, or 0.4x forward price-to-sales. Check out our free in-depth research report to learn more about why CHPT doesn’t pass our bar.
One Industrials Stock to Buy:
RBC Bearings (RBC)
Market Cap: $14.47 billion
With a Guinness World Record for engineering the largest spherical plain bearing, RBC Bearings (NYSE: RBC) is a manufacturer of bearings and related components for the aerospace & defense, industrial, and transportation industries.
Why Is RBC a Good Business?
- Impressive 21% annual revenue growth over the last five years indicates it’s winning market share this cycle
- Earnings per share grew by 19.7% annually over the last five years, massively outpacing its peers
- Strong free cash flow margin of 15.6% enables it to reinvest or return capital consistently
At $462 per share, RBC Bearings trades at 35.6x forward P/E. Is now the right time to buy? See for yourself in our full research report, it’s free for active Edge members.
Stocks We Like Even More
Your portfolio can’t afford to be based on yesterday’s story. The risk in a handful of heavily crowded stocks is rising daily.
The names generating the next wave of massive growth are right here in 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 244% over the last five years (as of June 30, 2025).
Stocks that made our list in 2020 include now familiar names such as Nvidia (+1,326% between June 2020 and June 2025) as well as under-the-radar businesses like the once-small-cap company Exlservice (+354% 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.
