Whether you see them or not, industrials businesses play a crucial part in our daily activities. Unfortunately, this role also comes with a demand profile tethered to the ebbs and flows of the broader economy, and investors seem to be forecasting a downturn - over the past six months, the industry has pulled back by 2.5%. This performance is a noticeable divergence from the S&P 500’s 11.7% return.
The elite companies can churn out earnings growth under any circumstance, however, and our mission at StockStory is to help you find them. On that note, here is one industrials stock boasting a durable advantage and two we’re steering clear of.
Two Industrials Stocks to Sell:
Atkore (ATKR)
Market Cap: $3.16 billion
Protecting the things that power our world, Atkore (NYSE:ATKR) designs and manufactures electrical safety products.
Why Are We Out on ATKR?
- Customers postponed purchases of its products and services this cycle as its revenue declined by 5.5% annually over the last two years
- Capital intensity has ramped up over the last five years as its free cash flow margin decreased by 11.5 percentage points
- Waning returns on capital imply its previous profit engines are losing steam
At $93.62 per share, Atkore trades at 15.2x forward P/E. If you’re considering ATKR for your portfolio, see our FREE research report to learn more.
Knight-Swift Transportation (KNX)
Market Cap: $11.32 billion
Covering 1.6 billion loaded miles in 2023 alone, Knight-Swift Transportation (NYSE:KNX) offers less-than-truckload and full truckload delivery services.
Why Do We Avoid KNX?
- Flat sales over the last two years suggest it must find different ways to grow during this cycle
- Earnings per share fell by 17.5% annually over the last five years while its revenue grew, showing its incremental sales were much less profitable
- Waning returns on capital from an already weak starting point displays the inefficacy of management’s past and current investment decisions
Knight-Swift Transportation is trading at $69.54 per share, or 20.6x forward P/E. To fully understand why you should be careful with KNX, check out our full research report (it’s free).
One Industrials Stock to Watch:
W.W. Grainger (GWW)
Market Cap: $61.84 billion
Founded as a supplier of motors, W.W. Grainger (NYSE:GWW) provides maintenance, repair, and operating (MRO) supplies and services to businesses and institutions.
Why Is GWW Interesting?
- Excellent operating margin of 14.8% highlights the efficiency of its business model, and its rise over the last five years was fueled by some leverage on its fixed costs
- Share repurchases over the last five years enabled its annual earnings per share growth of 20.7% to outpace its revenue gains
- Industry-leading 37.8% return on capital demonstrates management’s skill in finding high-return investments
W.W. Grainger’s stock price of $1,313 implies a valuation ratio of 26.5x forward P/E. Is now the time to initiate a position? Find out in our full research report, it’s free.
Stocks We Like Even More
WHILE YOU’RE HERE: Top 9 Market-Beating Stocks. The best stocks don’t just beat the market once. They do it again. And again. Robust revenue growth, rising free cash flow, returns on capital that leave their competition in the dust. The market has already rewarded these businesses.
But our AI platform says the party isn’t over. Find out which 9 stocks made the cut this week — FREE. Get Our Top 9 Market-Beating Stocks for Free HERE.
Stocks that made our list in 2020 include now familiar names such as Nvidia (+1,460% between June 2020 and June 2025) as well as under-the-radar businesses like the once-small-cap company Exlservice (+271% between June 2020 and June 2025). Find your next big winner with StockStory today.