Whether you see them or not, industrials businesses play a crucial part in our daily activities. Sure, they are at the whim of macroeconomic factors that influence capital spending (like interest rates), but the industry has held its ground over the past six months as its 6% return was almost identical to the S&P 500.
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. With that said, here is one resilient industrials stock at the top of our wish list and two we’re steering clear of.
Two Industrials Stocks to Sell:
Terex (TEX)
Market Cap: $7.97 billion
With humble beginnings as a dump truck company, Terex (NYSE: TEX) today manufactures lifting and material handling equipment designed to move and hoist heavy goods and materials.
Why Does TEX Fall Short?
- Sales trends were unexciting over the last two years as its 6.7% annual growth was below the typical industrials company
- Revenue growth over the past two years was nullified by the company’s new share issuances as its earnings per share fell by 47.8% annually
- Eroding returns on capital suggest its historical profit centers are aging
At $69.85 per share, Terex trades at 13.9x forward P/E. To fully understand why you should be careful with TEX, check out our full research report (it’s free).
Trex (TREX)
Market Cap: $4.51 billion
Addressing the demand for aesthetically-pleasing and unique outdoor living spaces, Trex Company (NYSE: TREX) makes wood-alternative decking, railing, and patio furniture.
Why Are We Out on TREX?
- Sales tumbled by 2.1% annually over the last two years, showing market trends are working against it during this cycle
- Free cash flow margin dropped by 8 percentage points over the last five years, implying the company became more capital intensive as competition picked up
- Waning returns on capital imply its previous profit engines are losing steam
Trex is trading at $43.43 per share, or 24.7x forward P/E. Read our free research report to see why you should think twice about including TREX in your portfolio.
One Industrials Stock to Buy:
Onterris (ONT)
Market Cap: $710.5 million
Founded to protect a tree-lined two-lane road, Onterris (NYSE: ONT) provides air quality monitoring, environmental laboratory testing, compliance, and environmental consulting services.
Why Should You Buy ONT?
- Market share has increased this cycle as its 15.4% annual revenue growth over the last five years was exceptional
- Earnings per share have massively outperformed its peers over the last two years, increasing by 44.4% annually
- Free cash flow margin grew by 3.8 percentage points over the last five years, giving the company more chips to play with
Onterris’s stock price of $19.63 implies a valuation ratio of 12.4x forward P/E. Is now the time to initiate a position? See for yourself in our comprehensive 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.
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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-micro-cap company Tecnoglass (+1,552% between June 2020 and June 2025). Find your next big winner with StockStory today.
