Even if they go mostly unnoticed, industrial businesses are the backbone of our country. 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 18.1% return over the past six months has topped the S&P 500 by 3.8 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. Keeping that in mind, here are three industrials stocks we’re passing on.
Saia (SAIA)
Market Cap: $8.67 billion
Pivoting its business model after realizing there was more success in delivering produce than selling it, Saia (NASDAQ: SAIA) is a provider of freight transportation solutions.
Why Do We Think Twice About SAIA?
- Weak tons shipped over the past two years show it’s struggled to increase its sales volumes and had to rely on price increases
- Free cash flow margin shrank by 7.6 percentage points over the last five years, suggesting the company is consuming more capital to stay competitive
- Diminishing returns on capital suggest its earlier profit pools are drying up
Saia is trading at $326.41 per share, or 31.3x forward P/E. If you’re considering SAIA for your portfolio, see our FREE research report to learn more.
Old Dominion Freight Line (ODFL)
Market Cap: $31.56 billion
With its name deriving from the Commonwealth of Virginia’s nickname, Old Dominion (NASDAQ: ODFL) delivers less-than-truckload (LTL) and full-container load freight.
Why Does ODFL Give Us Pause?
- Declining unit sales over the past two years suggest it might have to lower prices to accelerate growth
- Falling earnings per share over the last two years has some investors worried as stock prices ultimately follow EPS over the long term
- Shrinking returns on capital suggest that increasing competition is eating into the company’s profitability
At $151.20 per share, Old Dominion Freight Line trades at 29.1x forward P/E. To fully understand why you should be careful with ODFL, check out our full research report (it’s free for active Edge members).
EnerSys (ENS)
Market Cap: $5.39 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 Does ENS Fall Short?
- Declining unit sales over the past two years show it’s struggled to increase its sales volumes and had to rely on price increases
- Projected sales growth of 1.6% for the next 12 months suggests sluggish demand
- High input costs result in an inferior gross margin of 26.1% that must be offset through higher volumes
EnerSys’s stock price of $145.79 implies a valuation ratio of 13.2x forward P/E. Check out our free in-depth research report to learn more about why ENS doesn’t pass our bar.
Stocks We Like More
If your portfolio success hinges on just 4 stocks, your wealth is built on fragile ground. You have a small window to secure high-quality assets before the market widens and these prices disappear.
Don’t wait for the next volatility shock. Check out our Top 5 Growth Stocks for this month. 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-micro-cap company Tecnoglass (+1,754% 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
StockStory is growing and hiring equity analyst and marketing roles. Are you a 0 to 1 builder passionate about the markets and AI? See the open roles here.
