Whether you see them or not, industrials businesses play a crucial part in our daily activities. But they are at the whim of volatile macroeconomic factors that influence capital spending (like interest rates), and the industry has underperformed the market over the past six months as its 2.3% return lagged the S&P 500 by 10.6 percentage points.
Despite the lackluster result, a few diamonds in the rough can produce earnings growth no matter what, and we started StockStory to help you find them. On that note, here is one resilient industrials stock at the top of our wish list and two that may face trouble.
Two Industrials Stocks to Sell:
Sherwin-Williams (SHW)
Market Cap: $77.58 billion
Widely known for its success in the paint industry, Sherwin-Williams (NYSE: SHW) is a manufacturer of paints, coatings, and related products.
Why Is SHW Not Exciting?
- Large revenue base makes it harder to increase sales quickly, and its annual revenue growth of 3% over the last two years was below our standards for the industrials sector
- Estimated sales growth of 5.3% for the next 12 months is soft and implies weaker demand
- Earnings per share lagged its peers over the last two years as they only grew by 4.5% annually
Sherwin-Williams’s stock price of $321.54 implies a valuation ratio of 25.3x forward P/E. Dive into our free research report to see why there are better opportunities than SHW.
Installed Building Products (IBP)
Market Cap: $5.27 billion
Founded in 1977, Installed Building Products (NYSE: IBP) is a company specializing in the installation of insulation, waterproofing, and other complementary building products for residential and commercial construction.
Why Does IBP Worry Us?
- Muted 1.8% annual revenue growth over the last two years shows its demand lagged behind its industrials peers
- Projected sales growth of 3.3% for the next 12 months suggests sluggish demand
- Earnings growth over the last two years fell short of the peer group average as its EPS only increased by 1.4% annually
At $198.81 per share, Installed Building Products trades at 18.3x forward P/E. Read our free research report to see why you should think twice about including IBP in your portfolio.
One Industrials Stock to Watch:
EnerSys (ENS)
Market Cap: $6.20 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 Do We Like ENS?
- Operating margin improvement of 7.3 percentage points over the last five years demonstrates its ability to scale efficiently
- Share buybacks catapulted its annual earnings per share growth to 20%, which outperformed its revenue gains over the last two years
- Free cash flow margin jumped by 23.8 percentage points over the last five years, giving the company more resources to pursue growth initiatives, repurchase shares, or pay dividends
EnerSys is trading at $175.50 per share, or 13x forward P/E. Is now a good time to buy? Find out in our full research report, it’s free.
High-Quality Stocks for All Market Conditions
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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-small-cap company Exlservice (+271% between June 2020 and June 2025). Find your next big winner with StockStory today.
