Even if they go mostly unnoticed, industrial businesses are the backbone of our country. They are also bound to benefit from a friendlier regulatory environment with the Trump administration, and this excitement has led to a six-month gain of 23.6% for the sector - higher than the S&P 500’s 7.7% return.
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 are two industrials stocks we think can generate sustainable market-beating returns and one that may face trouble.
One Industrials Stock to Sell:
Global Industrial (GIC)
Market Cap: $1.27 billion
Formerly known as Systemax, Global Industrial (NYSE: GIC) distributes industrial and commercial products to businesses and institutions.
Why Is GIC Risky?
- Sales trends were unexciting over the last two years as its 4.9% annual growth was below the typical industrials company
- Earnings per share fell by 1.4% annually over the last two years while its revenue grew, showing its incremental sales were much less profitable
- Waning returns on capital imply its previous profit engines are losing steam
At $32.91 per share, Global Industrial trades at 17.1x forward P/E. If you’re considering GIC for your portfolio, see our FREE research report to learn more.
Two Industrials Stocks to Watch:
Leidos (LDOS)
Market Cap: $22.12 billion
Formed through the split of IT services company SAIC, Leidos (NYSE: LDOS) offers technology and engineering solutions such as military training systems for the defense, civil, and health markets.
Why Do We Like LDOS?
- Demand is greater than supply as the company’s 15.2% average backlog growth over the past two years shows it’s securing new contracts and accumulating more orders than it can fulfill
- Performance over the past two years was turbocharged by share buybacks, which enabled its earnings per share to grow faster than its revenue
- Free cash flow margin increased by 3.3 percentage points over the last five years, giving the company more capital to invest or return to shareholders
Leidos is trading at $174.50 per share, or 16.7x forward P/E. Is now the time to initiate a position? Find out in our full research report, it’s free.
Itron (ITRI)
Market Cap: $4.48 billion
Founded by a small group of engineers who wanted to build a more efficient way to read utility meters, Itron (NASDAQ: ITRI) offers energy and water management products for the utility industry, municipalities, and industrial customers.
Why Could ITRI Be a Winner?
- Operating profits and efficiency rose over the last five years as it benefited from some fixed cost leverage
- Incremental sales over the last two years have been highly profitable as its earnings per share increased by 46% annually, topping its revenue gains
- Free cash flow margin expanded by 7.1 percentage points over the last five years, providing additional flexibility for investments and share buybacks/dividends
Itron’s stock price of $99.60 implies a valuation ratio of 16x forward P/E. Is now the right time to buy? See for yourself in our full research report, it’s free.
Stocks We Like Even More
Your portfolio can’t afford to be based on yesterday’s story. The risk in a handful of heavily crowded stocks is rising daily.
The names generating the next wave of massive growth are right here in our Top 9 Market-Beating Stocks. 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.
