Even if they go mostly unnoticed, industrial businesses are the backbone of our country. But their prominence also brings high exposure to the ups and downs of economic cycles. Luckily, the tide is turning in their favor as the industry’s 17.2% return over the past six months has topped the S&P 500 by 8.4 percentage points.
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. Taking that into account, here is one industrials stock boasting a durable advantage and two we’re swiping left on.
Two Industrials Stocks to Sell:
3M (MMM)
Market Cap: $83.81 billion
Producers of the first asthma inhaler, 3M Company (NYSE:MMM) is a global conglomerate known for products in industries like healthcare, safety, electronics, and consumer goods.
Why Do We Think Twice About MMM?
- Organic sales performance over the past two years indicates the company may need to make strategic adjustments or rely on M&A to catalyze faster growth
- Projected sales growth of 3.7% for the next 12 months suggests sluggish demand
- Earnings per share have contracted by 2.8% annually over the last five years, a headwind for returns as stock prices often echo long-term EPS performance
3M is trading at $158.80 per share, or 18.6x forward P/E. Dive into our free research report to see why there are better opportunities than MMM.
Goodyear (GT)
Market Cap: $2.73 billion
With its iconic blimp floating above major sporting events since 1925, Goodyear (NYSE:GT) is one of the world's largest tire manufacturers, producing and selling tires for automobiles, trucks, aircraft, and other vehicles, along with related services.
Why Do We Think GT Will Underperform?
- Declining unit sales over the past two years imply it may need to invest in improvements to get back on track
- Capital intensity has ramped up over the last five years as its free cash flow margin decreased by 5.2 percentage points
- Low returns on capital reflect management’s struggle to allocate funds effectively, and its shrinking returns suggest its past profit sources are losing steam
Goodyear’s stock price of $9.53 implies a valuation ratio of 8.3x forward P/E. If you’re considering GT for your portfolio, see our FREE research report to learn more.
One Industrials Stock to Watch:
Montrose (MEG)
Market Cap: $820.5 million
Founded to protect a tree-lined two-lane road, Montrose (NYSE:MEG) provides air quality monitoring, environmental laboratory testing, compliance, and environmental consulting services.
Why Could MEG Be a Winner?
- Annual revenue growth of 17.6% over the past two years was outstanding, reflecting market share gains this cycle
- Earnings per share grew by 109% annually over the last two years and trumped its peers
- Free cash flow margin grew by 6.6 percentage points over the last five years, giving the company more chips to play with
At $24.19 per share, Montrose trades at 18.1x forward P/E. Is now the right time to buy? Find out in our full research report, it’s free.
Stocks We Like Even More
The market’s up big this year - but there’s a catch. Just 4 stocks account for half the S&P 500’s entire gain. That kind of concentration makes investors nervous, and for good reason. While everyone piles into the same crowded names, smart investors are hunting quality where no one’s looking - and paying a fraction of the price. Check out the high-quality names we’ve flagged in our Top 5 Strong Momentum 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 Tecnoglass (+1,754% five-year return). Find your next big winner with StockStory today.