Industrials businesses quietly power the physical things we depend on, from cars and homes to e-commerce infrastructure. But their prominence also brings high exposure to the ups and downs of economic cycles. Luckily, the tide is turning in their favor as the industry’s 19.9% return over the past six months has topped the S&P 500 by 10.1 percentage points.
Nevertheless, investors must be mindful as the cycle can unexpectedly turn. When this inevitably happens, only the elite companies will survive and ultimately thrive. Keeping that in mind, here are two resilient industrials stocks at the top of our wish list and one that may face trouble.
One Industrials Stock to Sell:
Lennar (LEN)
Market Cap: $22.32 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 Should You Dump LEN?
- Backlog has dropped by 11.4% on average over the past two years, suggesting it’s losing orders as competition picks up
- Free cash flow margin shrank by 7.5 percentage points over the last five years, suggesting the company is consuming more capital to stay competitive
- Shrinking returns on capital suggest that increasing competition is eating into the company’s profitability
At $91.02 per share, Lennar trades at 14.5x forward P/E. Check out our free in-depth research report to learn more about why LEN doesn’t pass our bar.
Two Industrials Stocks to Watch:
Cadre (CDRE)
Market Cap: $1.31 billion
Originally known as Safariland, Cadre (NYSE: CDRE) specializes in manufacturing and distributing safety and survivability equipment for first responders.
Why Are We Positive on CDRE?
- Market share has increased this cycle as its 11.8% annual revenue growth over the last two years was exceptional
- Market share is on track to rise over the next 12 months as its 17.6% projected revenue growth implies demand will accelerate from its two-year trend
- Operating profits and efficiency rose over the last five years as it benefited from some fixed cost leverage
Cadre’s stock price of $30.72 implies a valuation ratio of 1.8x forward price-to-sales. Is now the time to initiate a position? Find out in our full research report, it’s free.
Graham Corporation (GHM)
Market Cap: $1.17 billion
Founded when its founder patented a unique design for a vacuum system used in the sugar refining process, Graham (NYSE: GHM) provides vacuum and heat transfer equipment for the energy, petrochemical, refining, and chemical sectors.
Why Should You Buy GHM?
- Market share has increased this cycle as its 15% annual revenue growth over the last two years was exceptional
- Earnings growth has massively outpaced its peers over the last one years as its EPS has compounded at 83.3% annually
- Free cash flow margin jumped by 15.4 percentage points over the last five years, giving the company more resources to pursue growth initiatives, repurchase shares, or pay dividends
Graham Corporation is trading at $100.00 per share, or 54.7x forward P/E. Is now a good 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 (+1,326% between June 2020 and June 2025) as well as under-the-radar businesses like the once-small-cap company Exlservice (+354% five-year return). Find your next big winner with StockStory today.
