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 market seems convinced that demand will slow. Due to this bearish outlook, the industry has tumbled by 7% over the past six months. This drawdown is a far cry from the S&P 500’s 9.7% ascent.
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. With that said, here are two industrials stocks we think can generate sustainable market-beating returns and one that may face trouble.
One Industrials Stock to Sell:
Helios (HLIO)
Market Cap: $2.24 billion
Founded on the principle of treating others as one wants to be treated, Helios (NYSE:HLIO) designs, manufactures, and sells motion and electronic control components for various sectors.
Why Do We Think Twice About HLIO?
- Absence of organic revenue growth over the past two years suggests it may have to lean into acquisitions to drive its expansion
- Costs have risen faster than its revenue over the last five years, causing its operating margin to decline by 7.1 percentage points
- Earnings per share were flat while its revenue grew over the last five years, partly because it issued new shares
Helios is trading at $67.90 per share, or 20.5x forward P/E. To fully understand why you should be careful with HLIO, check out our full research report (it’s free).
Two Industrials Stocks to Buy:
Dycom (DY)
Market Cap: $7.77 billion
Working alongside some of the most popular mobile carriers in the world, Dycom (NYSE:DY) builds and maintains telecommunications infrastructure.
Why Do We Love DY?
- Annual revenue growth of 24.6% over the last two years was superb and indicates its market share increased during this cycle
- Incremental sales over the last two years have been highly profitable as its earnings per share increased by 37% annually, topping its revenue gains
- Free cash flow margin jumped by 6.4 percentage points over the last five years, giving the company more resources to pursue growth initiatives, repurchase shares, or pay dividends
At $257.89 per share, Dycom trades at 14.1x forward P/E. Is now the time to initiate a position? See for yourself in our comprehensive research report, it’s free.
GE Vernova (GEV)
Market Cap: $246.7 billion
Born from the energy business of industrial giant General Electric in a 2023 spin-off, GE Vernova (NYSE:GEV) designs, manufactures, and services power generation equipment and grid technologies to help customers build more reliable and sustainable electric systems.
Why Will GEV Outperform?
- Market share has increased this cycle as its 10.7% annual revenue growth over the last two years was exceptional
- Share repurchases have amplified shareholder returns as its annual earnings per share growth of 169% exceeded its revenue gains over the last two years
- Free cash flow margin grew by 45.3 percentage points over the last four years, giving the company more chips to play with
GE Vernova’s stock price of $924 implies a valuation ratio of 44.8x forward P/E. Is now a good time to buy? Find out in our full research report, it’s free.
Stocks We Like Even More
WHILE YOU’RE HERE: Top 9 Market-Beating Stocks. The best stocks don’t just beat the market once. They do it again. And again. Robust revenue growth, rising free cash flow, returns on capital that leave their competition in the dust. The market has already rewarded these businesses.
But our AI platform says the party isn’t over. Find out which 9 stocks made the cut this week — FREE. Get Our Top 9 Market-Beating 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 Comfort Systems (+1,154% between June 2020 and June 2025). Find your next big winner with StockStory today.