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 13.6% for the sector - higher than the S&P 500’s 10.1% 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. On that note, here is one industrials stock boasting a durable advantage and two that may face trouble.
Two Industrials Stocks to Sell:
Builders FirstSource (BLDR)
Market Cap: $11.99 billion
Headquartered in Irving, TX, Builders FirstSource (NYSE:BLDR) is a construction materials manufacturer that offers a variety of lumber and lumber-related building products.
Why Are We Cautious About BLDR?
- Sales tumbled by 4.9% annually over the last two years, showing market trends are working against its favor during this cycle
- Earnings per share have dipped by 24.8% annually over the past two years, which is concerning because stock prices follow EPS over the long term
- Diminishing returns on capital suggest its earlier profit pools are drying up
Builders FirstSource is trading at $108.60 per share, or 16.9x forward P/E. Dive into our free research report to see why there are better opportunities than BLDR.
REV Group (REVG)
Market Cap: $3.11 billion
Offering the first full-electric North American fire truck, REV (NYSE:REVG) manufactures and sells specialty vehicles.
Why Does REVG Give Us Pause?
- Sales pipeline suggests its future revenue growth may not meet our standards as its average backlog growth of 3.7% for the past two years was weak
- Gross margin of 12.5% is below its competitors, leaving less money to invest in areas like marketing and R&D
- Poor expense management has led to an operating margin of 3.9% that is below the industry average
REV Group’s stock price of $63.75 implies a valuation ratio of 16.8x forward P/E. If you’re considering REVG for your portfolio, see our FREE research report to learn more.
One Industrials Stock to Buy:
Nextracker (NXT)
Market Cap: $13.3 billion
With its technology playing a key role in the massive 1.2 gigawatt Noor Abu Dhabi solar farm project, Nextracker (NASDAQ:NXT) is a provider of solar tracker systems that help solar panels follow the sun.
Why Are We Backing NXT?
- Average backlog growth of 56.9% over the past two years shows it has a steady sales pipeline that will drive future orders
- Free cash flow margin expanded by 15.6 percentage points over the last five years, providing additional flexibility for investments and share buybacks/dividends
- Returns on capital are growing as management capitalizes on its market opportunities
At $89.71 per share, Nextracker trades at 22.1x forward P/E. Is now a good time to buy? See for yourself in our full research report, it’s free for active Edge members.
Stocks We Like Even More
Check out the high-quality names we’ve flagged 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).
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