Even if they go mostly unnoticed, industrial businesses are the backbone of our country. Still, their generally high capital requirements expose them to the ups and downs of economic cycles, and the market seems to be baking in a prolonged downturn as the industry has shed 10.4% over the past six months. This drop was worse than the S&P 500’s 1.9% loss.
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. On that note, here are three industrials stocks best left ignored.
Atkore (ATKR)
Market Cap: $2.29 billion
Protecting the things that power our world, Atkore (NYSE: ATKR) designs and manufactures electrical safety products.
Why Should You Sell ATKR?
- Core business is underperforming as its organic revenue has disappointed over the past two years, suggesting it might need acquisitions to stimulate growth
- Performance over the past two years shows each sale was less profitable as its earnings per share dropped by 31.5% annually, worse than its revenue
- Waning returns on capital imply its previous profit engines are losing steam
Atkore is trading at $68.50 per share, or 10.5x forward P/E. Check out our free in-depth research report to learn more about why ATKR doesn’t pass our bar.
Kennametal (KMT)
Market Cap: $1.64 billion
Involved in manufacturing hard tips of anti-tank projectiles in World War II, Kennametal (NYSE: KMT) is a provider of industrial materials and tools for various sectors.
Why Should You Dump KMT?
- Organic sales performance over the past two years indicates the company may need to make strategic adjustments or rely on M&A to catalyze faster growth
- Projected sales for the next 12 months are flat and suggest demand will be subdued
- Falling earnings per share over the last five years has some investors worried as stock prices ultimately follow EPS over the long term
Kennametal’s stock price of $21.52 implies a valuation ratio of 17.9x forward P/E. To fully understand why you should be careful with KMT, check out our full research report (it’s free).
Crown Holdings (CCK)
Market Cap: $11.3 billion
Formerly Crown Cork & Seal, Crown Holdings (NYSE: CCK) produces packaging products for consumer marketing companies, including food, beverage, household, and industrial products.
Why Do We Avoid CCK?
- Underwhelming constant currency revenue performance over the past two years suggests its product offering at current prices doesn’t resonate with customers
- Projected sales growth of 2% for the next 12 months suggests sluggish demand
- Competitive supply chain dynamics and steep production costs are reflected in its low gross margin of 20.3%
At $98.20 per share, Crown Holdings trades at 14.1x forward P/E. If you’re considering CCK for your portfolio, see our FREE research report to learn more.
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.
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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.