1 Industrials Stock on Our Buy List and 2 We Turn Down
Whether you see them or not, industrials businesses play a crucial part in our daily activities. 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 2.7% return lagged the S&P 500 by 11.1 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. On that note, here is one resilient industrials stock at the top of our wish list and two we’re passing on.
Two Industrials Stocks to Sell:
Insteel (IIIN)
Market Cap: $580.7 million
Growing from a small wire manufacturer to one of the largest in the U.S., Insteel (NYSE:IIIN) provides steel wire reinforcing products for concrete.
Why Is IIIN Not Exciting?
- 4.9% annual revenue growth over the last five years was slower than its industrials peers
- Incremental sales over the last five years were much less profitable as its earnings per share fell by 6.6% annually while its revenue grew
- Waning returns on capital imply its previous profit engines are losing steam
Insteel is trading at $30 per share, or 14.2x forward P/E. Read our free research report to see why you should think twice about including IIIN in your portfolio.
XPO (XPO)
Market Cap: $20.87 billion
Owning a mobile game simulating freight operations for the Tour de France, XPO (NYSE:XPO) is a transportation company specializing in expedited shipping services.
Why Do We Think Twice About XPO?
- Muted 3.4% annual revenue growth over the last two years shows its demand lagged behind its industrials peers
- Earnings per share fell by 2.7% annually over the last five years while its revenue grew, partly because it diluted shareholders
- Poor free cash flow margin of 1.6% for the last five years limits its freedom to invest in growth initiatives, execute share buybacks, or pay dividends
At $176.48 per share, XPO trades at 30.4x forward P/E. Dive into our free research report to see why there are better opportunities than XPO.
One Industrials Stock to Buy:
CSW (CSW)
Market Cap: $4.72 billion
With over two centuries of combined operations manufacturing and supplying, CSW (NYSE:CSW) offers special chemicals, coatings, sealants, and lubricants for various industries.
Why Is CSW a Top Pick?
- Impressive 19.7% annual revenue growth over the last two years indicates it’s winning market share this cycle
- Highly efficient business model is illustrated by its impressive 18.4% operating margin
- Earnings growth has massively outpaced its peers over the last two years as its EPS has compounded at 27.1% annually
CSW’s stock price of $290.94 implies a valuation ratio of 22.9x forward P/E. Is now a good time to buy? See for yourself in our full research report, it’s free.
Stocks We Like Even More
ALSO WORTH WATCHING: Top 5 Momentum Stocks. The best time to own a great stock is when the market is finally noticing it. These aren’t just high-quality businesses. Something is happening with them right now. Elite fundamentals meet near-term momentum — both boxes checked at the same time.
Find out which stocks our AI platform is flagging this week. See this week’s Strong Momentum stocks — FREE. Get Our Strong Momentum Stocks for Free HERE.
Stocks that made our list in 2020 include now familiar names such as Nvidia (+1,460% between June 2020 and June 2025) as well as under-the-radar businesses like the once-small-cap company Exlservice (+271% between June 2020 and June 2025). Find your next big winner with StockStory today.