Even if they go mostly unnoticed, industrial businesses are the backbone of our country. Unfortunately, this role also comes with a demand profile tethered to the ebbs and flows of the broader economy, and the industry is currently lagging as its six-month return of 4.5% has trailed the S&P 500’s 9% gain.
Only some companies are subject to these dynamics, however, and a handful of high-quality businesses can deliver earnings growth in any environment. Keeping that in mind, here is one industrials stock boasting a durable advantage and two best left ignored.
Two Industrials Stocks to Sell:
Griffon (GFF)
Market Cap: $3.56 billion
Initially in the defense industry, Griffon (NYSE:GFF) is a now diversified company specializing in home improvement, professional equipment, and building products.
Why Are We Cautious About GFF?
-
Annual sales declines of 5.2% for the past two years show its products and services struggled to connect with the market during this cycle
-
Projected sales growth of 1.4% for the next 12 months suggests sluggish demand
Griffon’s stock price of $75 implies a valuation ratio of 13.1x forward price-to-earnings. Dive into our free research report to see why there are better opportunities than GFF .
Orion (ORN)
Market Cap: $300.3 million
Established in 1994, Orion (NYSE:ORN) provides construction services for marine infrastructure and industrial projects.
Why Do We Steer Clear of ORN?
-
4.6% annual revenue growth over the last two years was slower than its industrials peers
-
Incremental sales over the last five years were much less profitable as its earnings per share fell by 19.1% annually while its revenue grew
-
Diminishing returns on capital from an already low starting point show that neither management’s prior nor current bets are going as planned
Orion is trading at $8.10 per share, or 24x forward price-to-earnings. If you’re considering ORN for your portfolio, see our FREE research report to learn more .
One Industrials Stock to Buy:
Core & Main (CNM)
Market Cap: $9.97 billion
Formerly a division of industrial distributor HD Supply, Core & Main (NYSE:CNM) is a provider of water, wastewater, and fire protection products and services.
Why Is CNM a Good Business?
-
Impressive 16.2% annual revenue growth over the last five years indicates it’s winning market share this cycle
-
Operating profits increased over the last five years as the company gained some leverage on its fixed costs and became more efficient
-
Share repurchases over the last two years enabled its annual earnings per share growth of 21.1% to outpace its revenue gains
At $52.01 per share, Core & Main trades at 22.8x forward price-to-earnings. Is now the right time to buy? Find out in our full research report, it’s free .
Stocks We Like Even More
With rates dropping, inflation stabilizing, and the elections in the rearview mirror, all signs point to the start of a new bull run - and we’re laser-focused on finding the best stocks for this upcoming cycle.
Put yourself in the driver’s seat by checking out 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 175% over the last five years.
Stocks that made our list in 2019 include now familiar names such as Nvidia (+2,183% between December 2019 and December 2024) as well as under-the-radar businesses like Axon (+711% five-year return). Find your next big winner with StockStory today for free .
