Industrials businesses quietly power the physical things we depend on, from cars and homes to e-commerce infrastructure. Still, their generally high capital requirements expose them to the ups and downs of economic cycles, and the market seems confused about where we could go next. This uncertainty has led to a flat return for the industry over the past six months while the S&P 500 was up 4.5%.

The elite companies can churn out earnings growth under any circumstance, however, and our mission at StockStory is to help you find them. Keeping that in mind, here are two industrials stocks we think can generate sustainable market-beating returns and one we’re passing on.

One IndustrialsStock to Sell:

Advanced Drainage (WMS)

Market Cap: $8.60 billion

Originally started as a farm water drainage company, Advanced Drainage Systems (NYSE: WMS) provides clean water management solutions to communities across America.

Why Is WMS Not Exciting?

1. Products and services are facing significant end-market challenges during this cycle as sales have declined by 2.8% annually over the last two years
2. Earnings per share have dipped by 2.2% annually over the past two years, which is concerning because stock prices follow EPS over the long term
3. Free cash flow margin shrank by 6.1 percentage points over the last five years, suggesting the company is consuming more capital to stay competitive

At $110.89 per share, Advanced Drainage trades at 17.5x forward P/E. If you’re considering WMS for your portfolio, see our FREE research report to learn more.

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?

1. Annual revenue growth of 9.7% over the last two years beat the sector average and underscores the unique value of its offerings
2. Demand for the next 12 months is expected to accelerate above its two-year trend as Wall Street forecasts robust revenue growth of 17.6%
3. Earnings growth has massively outpaced its peers over the last two years as its EPS has compounded at 19.7% annually

Cadre is trading at $32.22 per share, or 20.3x forward P/E. Is now the right time to buy? See for yourself in our full research report, it’s free.

Watts Water Technologies (WTS)

Market Cap: $8.24 billion

Founded in 1874, Watts Water (NYSE: WTS) specializes in manufacturing water products and systems for residential, commercial, and industrial applications globally.

Why Should WTS Be on Your Watchlist?

1. Offerings are mission-critical for businesses and lead to a top-tier gross margin of 45%
2. Operating margin improvement of 4.5 percentage points over the last five years demonstrates its ability to scale efficiently
3. Share buybacks catapulted its annual earnings per share growth to 16.6%, which outperformed its revenue gains over the last five years

Watts Water Technologies’s stock price of $247.02 implies a valuation ratio of 26.7x forward P/E. Is now the time to initiate a position? Find out in our full research report, it’s free.

Stocks We Like Even More

The market surged in 2024 and reached record highs after Donald Trump’s presidential victory in November, but questions about new economic policies are adding much uncertainty for 2025.

While the crowd speculates what might happen next, we’re homing in on the companies that can succeed regardless of the political or macroeconomic environment. Put yourself in the driver’s seat and build a durable portfolio by checking out our Top 5 Growth Stocks for this month. 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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