Industrials businesses quietly power the physical things we depend on, from cars and homes to e-commerce infrastructure. 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 19.9% for the sector - higher than the S&P 500’s 11.5% 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. Taking that into account, here is one industrials stock poised to generate sustainable market-beating returns and two that may face trouble.
Two Industrials Stocks to Sell:
Herc (HRI)
Market Cap: $5.29 billion
Formerly a subsidiary of Hertz Corporation and with a logo that still bears some similarities to its former parent, Herc Holdings (NYSE: HRI) provides equipment rental and related services to a wide range of industries.
Why Are We Cautious About HRI?
- Performance over the past two years shows its incremental sales were much less profitable, as its earnings per share fell by 15.2% annually
- 9.4 percentage point decline in its free cash flow margin over the last five years reflects the company’s increased investments to defend its market position
- High net-debt-to-EBITDA ratio of 6× increases the risk of forced asset sales or dilutive financing if operational performance weakens
Herc is trading at $159.05 per share, or 21.4x forward P/E. Check out our free in-depth research report to learn more about why HRI doesn’t pass our bar.
Winnebago (WGO)
Market Cap: $1.30 billion
Created to provide high-quality, affordable RVs to the post-war American family, Winnebago (NYSE: WGO) is a manufacturer of recreational vehicles, providing a range of motorhomes, travel trailers, and fifth-wheel products for outdoor and adventure lifestyles.
Why Do We Pass on WGO?
- Annual sales declines of 6.7% for the past two years show its products and services struggled to connect with the market during this cycle
- Incremental sales over the last five years were much less profitable as its earnings per share fell by 10.1% annually while its revenue grew
- Eroding returns on capital suggest its historical profit centers are aging
At $46.04 per share, Winnebago trades at 18x forward P/E. To fully understand why you should be careful with WGO, check out our full research report (it’s free).
One Industrials Stock to Buy:
Bloom Energy (BE)
Market Cap: $31.56 billion
Working in stealth mode for eight years, Bloom Energy (NYSE: BE) designs, manufactures, and markets solid oxide fuel cell systems for on-site power generation.
Why Is BE a Top Pick?
- Annual revenue growth of 19.1% over the last five years was superb and indicates its market share increased during this cycle
- Free cash flow margin is now positive, showing the company is at an important crossroads
- Improving returns on capital suggest its past investments are beginning to deliver value
Bloom Energy’s stock price of $133.00 implies a valuation ratio of 162.5x forward P/E. Is now the time to initiate a position? See for yourself in our in-depth research report, it’s free.
Stocks We Like Even More
Your portfolio can’t afford to be based on yesterday’s story. The risk in a handful of heavily crowded stocks is rising daily.
The names generating the next wave of massive growth are right here in 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 244% over the last five years (as of June 30, 2025).
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-micro-cap company Tecnoglass (+1,754% five-year return). Find your next big winner with StockStory today.
