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 market seems convinced that demand will slow. Due to this bearish outlook, the industry has tumbled by 3% over the past six months. This performance is a stark contrast from the S&P 500’s 12.3% gain.
Only some companies are subject to these dynamics, however, and a handful of high-quality businesses can deliver earnings growth in any environment. With that said, here are three industrials stocks we think can generate sustainable market-beating returns.
AAON (AAON)
Market Cap: $6.26 billion
Backed by two million square feet of lab testing space, AAON (NASDAQ: AAON) makes heating, ventilation, and air conditioning equipment for different types of buildings.
Why Are We Positive on AAON?
- Demand is greater than supply as the company’s 93.5% average backlog growth over the past two years shows it’s securing new contracts and accumulating more orders than it can fulfill
- Market share will likely rise over the next 12 months as its expected revenue growth of 26.5% is robust
- Industry-leading 17.4% return on capital demonstrates management’s skill in finding high-return investments
AAON’s stock price of $76.33 implies a valuation ratio of 28.6x forward P/E. Is now a good time to buy? See for yourself in our full research report, it’s free.
Fastenal (FAST)
Market Cap: $57.12 billion
Founded in 1967, Fastenal (NASDAQ: FAST) provides industrial and construction supplies, including fasteners, tools, safety products, and many other product categories to businesses globally.
Why Does FAST Catch Our Eye?
- Offerings are difficult to replicate at scale and result in a best-in-class gross margin of 45.4%
- Excellent operating margin of 20.4% highlights the efficiency of its business model
- Free cash flow margin increased by 5.1 percentage points over the last five years, giving the company more capital to invest or return to shareholders
Fastenal is trading at $49.85 per share, or 38.2x forward P/E. Is now the time to initiate a position? Find out in our full research report, it’s free.
American Superconductor (AMSC)
Market Cap: $1.38 billion
Founded in 1987, American Superconductor (NASDAQ: AMSC) has shifted from superconductor research to developing power systems, adapting to changing energy grid needs and naval technology requirements.
Why Do We Love AMSC?
- Annual revenue growth of 43.6% over the past two years was outstanding, reflecting market share gains this cycle
- Free cash flow margin increased by 25.5 percentage points over the last five years, giving the company more capital to invest or return to shareholders
- Improving returns on capital suggest its past investments are beginning to deliver value
At $28.65 per share, American Superconductor trades at 29.1x 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
ONE MORE THING: Top 6 Stocks for This Week. This market is separating quality stocks from expensive ones fast. AI is taking down whole sectors with no warning. In a rotation this fast, you need more than a list of good companies.
Our AI system flagged Palantir before it ran 1,662% between October 2022 and February 2026. AppLovin before it ran 753% between February 2024 and February 2026. Nvidia before it ran 1,178% between January 2023 and February 2026. Each week it produces 6 new names that pass the same tests. Get Our Top 6 Stocks for Free HERE.
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-micro-cap company Tecnoglass (+1,552% between June 2020 and June 2025). Find your next big winner with StockStory today.
