Whether you see them or not, industrials businesses play a crucial part in our daily activities. They are also bound to benefit from a friendlier regulatory environment with the Trump administration, and this excitement has led to a six-month gain of 22.6% for the sector - higher than the S&P 500’s 16.4% return.
Nevertheless, investors must be mindful as the cycle can unexpectedly turn. When this inevitably happens, only the elite companies will survive and ultimately thrive. With that said, here is one industrials stock boasting a durable advantage and two that may face trouble.
Two Industrials Stocks to Sell:
Flowserve (FLS)
Market Cap: $7.36 billion
Manufacturing the largest pump ever built for nuclear power generation, Flowserve (NYSE:FLS) manufactures and sells flow control equipment for various industries.
Why Are We Cautious About FLS?
- Sales pipeline suggests its future revenue growth may not meet our standards as its average backlog growth of 1.6% for the past two years was weak
- Estimated sales growth of 5.8% for the next 12 months implies demand will slow from its two-year trend
- Low free cash flow margin of 5% for the last five years gives it little breathing room, constraining its ability to self-fund growth or return capital to shareholders
Flowserve’s stock price of $56.25 implies a valuation ratio of 16.4x forward P/E. Dive into our free research report to see why there are better opportunities than FLS.
Crown Holdings (CCK)
Market Cap: $10.97 billion
Formerly Crown Cork & Seal, Crown Holdings (NYSE:CCK) produces packaging products for consumer marketing companies, including food, beverage, household, and industrial products.
Why Do We Think CCK Will Underperform?
- Weak constant currency growth over the past two years indicates challenges in maintaining its market share
- Demand will likely be soft over the next 12 months as Wall Street’s estimates imply tepid growth of 2.9%
- High input costs result in an inferior gross margin of 20.4% that must be offset through higher volumes
At $95.33 per share, Crown Holdings trades at 13.2x forward P/E. If you’re considering CCK for your portfolio, see our FREE research report to learn more.
One Industrials Stock to Buy:
GE Aerospace (GE)
Market Cap: $310.7 billion
One of the original 12 companies on the Dow Jones Industrial Average, General Electric (NYSE:GE) is a multinational conglomerate providing technologies for various sectors including aviation, power, renewable energy, and healthcare.
Why Is GE a Good Business?
- Annual revenue growth of 13.9% over the past two years was outstanding, reflecting market share gains this cycle
- Strong free cash flow margin of 19.2% enables it to reinvest or return capital consistently
- Rising returns on capital show management is finding more attractive investment opportunities
GE Aerospace is trading at $293.89 per share, or 49.7x forward P/E. Is now the right time to buy? See for yourself in our comprehensive research report, it’s free.
Stocks We Like Even More
Trump’s April 2025 tariff bombshell triggered a massive market selloff, but stocks have since staged an impressive recovery, leaving those who panic sold on the sidelines.
Take advantage of the rebound by checking out our Top 6 Stocks for this week. This is a curated list of our High Quality stocks that have generated a market-beating return of 183% over the last five years (as of March 31st 2025).
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 Tecnoglass (+1,754% five-year return). Find your next big winner with StockStory today for free. Find your next big winner with StockStory today. Find your next big winner with StockStory today
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