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 5.7%. This performance was discouraging since the S&P 500 held its ground.
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. Taking that into account, here are two resilient industrials stocks at the top of our wish list and one best left ignored.
One Industrials Stock to Sell:
Markforged (MKFG)
Market Cap: $98.34 million
Beginning as a start-up at SolidWorks World–an annual design and engineering conference, Markforged (NYSE: MKFG) offers 3D printers and softwares to manufacturers of various industries.
Why Are We Wary of MKFG?
- Annual sales declines of 8.2% for the past two years show its products and services struggled to connect with the market during this cycle
- Capital intensity has ramped up over the last five years as its free cash flow margin decreased by 63.8 percentage points
- Short cash runway increases the probability of a capital raise that dilutes existing shareholders
Markforged is trading at $4.60 per share, or 1x forward price-to-sales. Check out our free in-depth research report to learn more about why MKFG doesn’t pass our bar.
Two Industrials Stocks to Watch:
Badger Meter (BMI)
Market Cap: $7.22 billion
The developer of the world’s first frost-proof water meter in 1905, Badger Meter (NYSE: BMI) provides water control and measure equipment to various industries.
Why Is BMI a Good Business?
- Impressive 20% annual revenue growth over the last two years indicates it’s winning market share this cycle
- Earnings per share have massively outperformed its peers over the last two years, increasing by 36.4% annually
- Impressive free cash flow profitability enables the company to fund new investments or reward investors with share buybacks/dividends
Badger Meter’s stock price of $243.35 implies a valuation ratio of 51.8x forward P/E. Is now the time to initiate a position? See for yourself in our comprehensive research report, it’s free.
Armstrong World (AWI)
Market Cap: $6.96 billion
Started as a two-man shop dating back to the 1860s, Armstrong (NYSE: AWI) provides ceiling and wall products to commercial and residential spaces.
Why Does AWI Stand Out?
- Solid 9.2% annual revenue growth over the last two years indicates its offering’s solve complex business issues
- Highly efficient business model is illustrated by its impressive 24.6% operating margin
- Robust free cash flow margin of 19.6% gives it many options for capital deployment
At $159.73 per share, Armstrong World trades at 22.3x forward P/E. Is now the right time to buy? Find out in our full research report, it’s free.
Stocks We Like Even More
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 5 Strong Momentum Stocks for this week. This is a curated list of our High Quality stocks that have generated a market-beating return of 176% over the last five years.
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.
