Industrials businesses quietly power the physical things we depend on, from cars and homes to e-commerce infrastructure. Unfortunately, this role also comes with a demand profile tethered to the ebbs and flows of the broader economy, and investors seem to be forecasting a downturn - over the past six months, the industry has pulled back by 10.4%. This drawdown was worse than the S&P 500’s 1.9% decline.
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. Keeping that in mind, here is one industrials stock poised to generate sustainable market-beating returns and two we’re steering clear of.
Two IndustrialsStocks to Sell:
WillScot Mobile Mini (WSC)
Market Cap: $5.07 billion
Originally focusing on mobile offices for construction sites, WillScot (NASDAQ:WSC) provides ready-to-use temporary spaces, largely for longer-term lease.
Why Does WSC Fall Short?
- 2.4% annual revenue growth over the last two years was slower than its industrials peers
- Incremental sales over the last two years were much less profitable as its earnings per share fell by 3.4% annually while its revenue grew
- Capital intensity has ramped up over the last five years as its free cash flow margin decreased by 5 percentage points
WillScot Mobile Mini is trading at $27.90 per share, or 16.8x forward P/E. Dive into our free research report to see why there are better opportunities than WSC.
AECOM (ACM)
Market Cap: $14.61 billion
Founded in 1990 when a group of engineers from five companies decided to merge, AECOM (NYSE:ACM) provides various infrastructure consulting services.
Why Does ACM Worry Us?
- Product roadmap and go-to-market strategy need to be reconsidered as its backlog has averaged 1.6% declines over the past two years
- Gross margin of 6.4% reflects its high production costs
- Operating margin of 4.3% falls short of the industry average, and the smaller profit dollars make it harder to react to unexpected market developments
AECOM’s stock price of $110.69 implies a valuation ratio of 21.6x forward P/E. Read our free research report to see why you should think twice about including ACM in your portfolio.
One Industrials Stock to Watch:
Valmont (VMI)
Market Cap: $6.49 billion
Credited with an invention in the 1950s that improved crop yields, Valmont (NYSE:VMI) provides engineered products and infrastructure services for the agricultural industry.
Why Could VMI Be a Winner?
- Operating margin expanded by 4.9 percentage points over the last five years as it scaled and became more efficient
- Earnings per share grew by 18.7% annually over the last two years and trumped its peers
- Free cash flow margin increased by 7.9 percentage points over the last five years, giving the company more capital to invest or return to shareholders
At $323.42 per share, Valmont trades at 17.5x forward P/E. Is now the right time to buy? See for yourself in our full research report, it’s free.
High-Quality Stocks for All Market Conditions
Market indices reached historic highs following Donald Trump’s presidential victory in November 2024, but the outlook for 2025 is clouded by new trade policies that could impact business confidence and growth.
While this has caused many investors to adopt a "fearful" wait-and-see approach, we’re leaning into our best ideas that can grow regardless of the political or macroeconomic climate. Take advantage of Mr. Market by checking 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 183% over the last five years (as of March 31st 2025).
Stocks that made our list in 2020 include now familiar names such as Nvidia (+1,545% between March 2020 and March 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 for free.