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 7.9%. This drawdown is a stark contrast from the S&P 500’s 7.2% gain.
The elite companies can churn out earnings growth under any circumstance, however, and our mission at StockStory is to help you find them. With that said, here is one industrials stock poised to generate sustainable market-beating returns and two best left ignored.
Two industrials stocks to sell:
Alta (ALTG)
Market cap: $241.1 million
Founded in 1984, Alta Equipment Group (NYSE:ALTG) is a provider of industrial and construction equipment and services across the Midwest and Northeast United States.
Why Do We Think ALTG Will Underperform?
- Customers postponed purchases of its products and services this cycle as its revenue declined by 2.6% annually over the last two years
- Historically negative EPS is a worrisome sign for conservative investors and obscures its long-term earnings potential
- 5× net-debt-to-EBITDA ratio shows it’s overleveraged and increases the probability of shareholder dilution if things turn unexpectedly
Alta is trading at $7.38 per share, or 6x forward EV-to-EBITDA. Read our free research report to see why you should think twice about including ALTG in your portfolio.
Lennox (LII)
Market cap: $11.77 billion
Based in Texas and founded over a century ago, Lennox (NYSE:LII) is a climate control solutions company offering heating, ventilation, air conditioning, and refrigeration (HVACR) goods.
Why Does LII Fall Short?
- Absence of organic revenue growth over the past two years suggests it may have to lean into acquisitions to drive its expansion
- Earnings growth over the last two years fell short of the peer group average as its EPS only increased by 4.2% annually
- Waning returns on capital imply its previous profit engines are losing steam
Lennox’s stock price of $341.61 implies a valuation ratio of 15.5x forward P/E. If you’re considering LII for your portfolio, see our FREE research report to learn more.
One industrials stock to buy:
Bel Fuse (BELFA)
Market cap: $3.31 billion
Founded by 26-year-old Elliot Bernstein during the electronics boom after WW2, Bel Fuse (NASDAQ:BELF.A) provides electronic systems and devices to the telecommunications, networking, transportation, and industrial sectors.
Why Is BELFA a Good Business?
- Impressive 22.3% annual revenue growth over the last two years indicates it’s winning market share this cycle
- Incremental sales significantly boosted profitability as its annual earnings per share growth of 37.9% over the last two years outstripped its revenue performance
- Free cash flow margin jumped by 7.2 percentage points over the last five years, giving the company more resources to pursue growth initiatives, repurchase shares, or pay dividends
At $185.04 per share, Bel Fuse trades at 23.8x forward P/E. Is now the time to initiate a position? See for yourself in our comprehensive research report, it’s free.
Stocks we like even more
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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.