1 Industrials Stock to Buy Right Now and 2 to Ghost

Even if they go mostly unnoticed, industrial businesses are the backbone of our country. But they are at the whim of volatile macroeconomic factors that influence capital spending (like interest rates), and the industry has underperformed the market over the past six months as its 12.6% return lagged the S&P 500 by 3.4 percentage points.

The elite companies can churn out earnings growth under any circumstance, however, and our mission at StockStory is to help you find them. Taking that into account, here is one resilient industrials stock at the top of our wish list and two best left ignored.

Two Industrials Stocks to Sell:

Gibraltar (ROCK)

Market Cap: $1.82 billion

Gibraltar (NASDAQ:ROCK) makes renewable energy, agriculture technology and infrastructure products. Its mission statement is to make everyday living more sustainable.

Why Are We Hesitant About ROCK?

1. Sales tumbled by 2.7% annually over the last two years, showing market trends are working against its favor during this cycle
2. Anticipated sales growth of 3.9% for the next year implies demand will be shaky
3. High input costs result in an inferior gross margin of 24.9% that must be offset through higher volumes

Gibraltar is trading at $58.43 per share, or 12.9x forward price-to-earnings. If you’re considering ROCK for your portfolio, see our FREE research report to learn more.

Trex (TREX)

Market Cap: $7.85 billion

Addressing the demand for aesthetically-pleasing and unique outdoor living spaces, Trex Company (NYSE:TREX) makes wood-alternative decking, railing, and patio furniture.

Why Are We Wary of TREX?

1. Organic revenue growth falls short of our benchmarks and implies it may need to improve its products, pricing, or go-to-market strategy
2. Demand will likely be weak over the next 12 months as Wall Street expects flat revenue
3. Diminishing returns on capital suggest its earlier profit pools are drying up

Trex’s stock price of $70.76 implies a valuation ratio of 36x forward price-to-earnings. To fully understand why you should be careful with TREX, check out our full research report (it’s free).

One Industrials Stock to Buy:

Trane Technologies (TT)

Market Cap: $80.49 billion

With low-pressure heating systems as the first product, Trane (NYSE:TT) designs, manufactures, and sells HVAC and refrigeration systems, the former to commercial and residential building customers and the latter to commercial truck manufacturers.

Why Will TT Beat the Market?

1. Impressive 11.4% annual revenue growth over the last two years indicates it’s winning market share this cycle
2. Operating profits increased over the last five years as the company gained some leverage on its fixed costs and became more efficient
3. Incremental sales significantly boosted profitability as its annual earnings per share growth of 23.6% over the last two years outstripped its revenue performance

At $354.14 per share, Trane Technologies trades at 28.1x forward price-to-earnings. Is now a good time to buy? See for yourself in our comprehensive research report, it’s free.

Stocks We Like Even More

With rates dropping, inflation stabilizing, and the elections in the rearview mirror, all signs point to the start of a new bull run - and we’re laser-focused on finding the best stocks for this upcoming cycle.

Put yourself in the driver’s seat by checking out our Top 9 Market-Beating Stocks. This is a curated list of our High Quality stocks that have generated a market-beating return of 175% over the last five years.

Stocks that made our list in 2019 include now familiar names such as Nvidia (+2,183% between December 2019 and December 2024) as well as under-the-radar businesses like Sterling Infrastructure (+1,096% five-year return). Find your next big winner with StockStory today for free.