Even if they go mostly unnoticed, industrial businesses are the backbone of our country. Their momentum is also rising as lower interest rates have incentivized higher capital spending. As a result, the industry has posted a 17.8% gain over the past six months, beating the S&P 500 by 8.3 percentage points.
Regardless of these results, investors should tread carefully. The diversity of companies in this space means that not all are created equal or well-positioned for the inescapable downturn. Keeping that in mind, here is one industrials stock boasting a durable advantage and two that may face trouble.
Two Industrials Stocks to Sell:
Generac (GNRC)
Market Cap: $10.22 billion
With its name deriving from a combination of “generating” and “AC”, Generac (NYSE:GNRC) offers generators and other power products for residential, industrial, and commercial use.
Why Are We Hesitant About GNRC?
- Sales trends were unexciting over the last two years as its 4.2% annual growth was below the typical industrials company
- Expenses have increased as a percentage of revenue over the last five years as its operating margin fell by 9.5 percentage points
- Diminishing returns on capital suggest its earlier profit pools are drying up
At $174.25 per share, Generac trades at 23.3x forward P/E. To fully understand why you should be careful with GNRC, check out our full research report (it’s free).
Vulcan Materials (VMC)
Market Cap: $39.6 billion
Founded in 1909, Vulcan Materials (NYSE:VMC) is a producer of construction aggregates, primarily crushed stone, sand, and gravel.
Why Is VMC Not Exciting?
- Sluggish trends in its tons shipped suggest customers aren’t adopting its solutions as quickly as the company hoped
- Demand will likely be soft over the next 12 months as Wall Street’s estimates imply tepid growth of 4.3%
- High input costs result in an inferior gross margin of 25.2% that must be offset through higher volumes
Vulcan Materials’s stock price of $294.50 implies a valuation ratio of 31.8x forward P/E. Read our free research report to see why you should think twice about including VMC in your portfolio.
One Industrials Stock to Watch:
Gorman-Rupp (GRC)
Market Cap: $1.39 billion
Powering fluid dynamics since 1934, Gorman-Rupp (NYSE:GRC) has evolved from its Ohio origins into a global manufacturer and seller of pumps and pump systems.
Why Could GRC Be a Winner?
- Impressive 13.5% annual revenue growth over the last five years indicates it’s winning market share this cycle
- Demand is greater than supply as the company’s 12.7% average backlog growth over the past two years shows it’s securing new contracts and accumulating more orders than it can fulfill
- Earnings growth has trumped its peers over the last two years as its EPS has compounded at 33% annually
Gorman-Rupp is trading at $52.77 per share, or 23.9x forward P/E. Is now the time to initiate a position? See for yourself in our full research report, it’s free.
Stocks We Like Even More
If your portfolio success hinges on just 4 stocks, your wealth is built on fragile ground. You have a small window to secure high-quality assets before the market widens and these prices disappear.
Don’t wait for the next volatility shock. Check out our Top 6 Stocks for this week. 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 Kadant (+351% five-year return). Find your next big winner with StockStory today.