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 1.8% return lagged the S&P 500 by 9.3 percentage points.
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. Keeping that in mind, here is one industrials stock boasting a durable advantage and two we’re steering clear of.
Two Industrials Stocks to Sell:
Carlisle (CSL)
Market Cap: $15.35 billion
Originally founded as Carlisle Tire and Rubber Company, Carlisle Companies (NYSE:CSL) is a multi-industry product manufacturer focusing on construction materials and weatherproofing technologies.
Why Does CSL Give Us Pause?
- Core business is underperforming as its organic revenue has disappointed over the past two years, suggesting it might need acquisitions to stimulate growth
- Demand will likely be soft over the next 12 months as Wall Street’s estimates imply tepid growth of 6.4%
- Earnings growth over the last two years fell short of the peer group average as its EPS only increased by 3.6% annually
At $384.75 per share, Carlisle trades at 16.8x forward P/E. If you’re considering CSL for your portfolio, see our FREE research report to learn more.
Lennar (LEN)
Market Cap: $21.19 billion
One of the largest homebuilders in America, Lennar (NYSE:LEN) is known for constructing affordable, move-up, and retirement homes across a range of markets and communities.
Why Do We Steer Clear of LEN?
- Demand cratered as it couldn’t win new orders over the past two years, leading to an average 9.2% decline in its backlog
- Earnings per share fell by 8.9% annually over the last five years while its revenue grew, showing its incremental sales were much less profitable
- Shrinking returns on capital suggest that increasing competition is eating into the company’s profitability
Lennar’s stock price of $88.11 implies a valuation ratio of 15x forward P/E. Read our free research report to see why you should think twice about including LEN in your portfolio.
One Industrials Stock to Buy:
MasTec (MTZ)
Market Cap: $21.6 billion
Involved in the 1996 Olympic Games MasTec (NYSE:MTZ) is an infrastructure construction company that specializes in the telecommunications, energy, and utility industries.
Why Is MTZ a Good Business?
- Backlog has averaged 24.9% growth over the past two years, showing it has a pipeline of unfulfilled orders that will support revenue in the future
- Exciting sales outlook for the upcoming 12 months calls for 24.9% growth, an acceleration from its two-year trend
- Earnings growth has massively outpaced its peers over the last two years as its EPS has compounded at 82.9% annually
MasTec is trading at $273.48 per share, or 23.7x forward P/E. Is now the right time to buy? See for yourself in our comprehensive research report, it’s free.
High-Quality Stocks for All Market Conditions
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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 Comfort Systems (+1,154% between June 2020 and June 2025). Find your next big winner with StockStory today.