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 12.9% return over the past six months has topped the S&P 500 by 9 percentage points.
Regardless of these results, investors should tread carefully. The diversity of companies in this space means that not all are created equal or well-positioned for the inescapable downturn. 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:
ChargePoint (CHPT)
Market Cap: $165.8 million
The most prominent EV charging company during the COVID bull market, ChargePoint (NYSE: CHPT) is a provider of electric vehicle charging technology solutions in North America and Europe.
Why Does CHPT Fall Short?
- Annual sales declines of 9.9% for the past two years show its products and services struggled to connect with the market during this cycle
- Cash-burning tendencies make us wonder if it can sustainably generate shareholder value
- Negative earnings profile makes it challenging to secure favorable financing terms from lenders
At $6.77 per share, ChargePoint trades at 0.4x forward price-to-sales. If you’re considering CHPT for your portfolio, see our FREE research report to learn more.
Trimble (TRMB)
Market Cap: $15.59 billion
Playing a role in the construction of the Paris Grand, Trimble (NASDAQ: TRMB) offers geospatial devices and technology to the agriculture, construction, transportation, and logistics industries.
Why Do We Steer Clear of TRMB?
- Sales tumbled by 2.8% annually over the last two years, showing market trends are working against its favor during this cycle
- Core business is underperforming as its organic revenue has disappointed over the past two years, suggesting it might need acquisitions to stimulate growth
- 9.2 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
Trimble’s stock price of $67.70 implies a valuation ratio of 19x forward P/E. To fully understand why you should be careful with TRMB, check out our full research report (it’s free).
One Industrials Stock to Buy:
Rollins (ROL)
Market Cap: $26.95 billion
Operating under multiple brands like Orkin and HomeTeam Pest Defense, Rollins (NYSE: ROL) provides pest and wildlife control services to residential and commercial customers.
Why Is ROL a Good Business?
- Market share has increased this cycle as its 11.7% annual revenue growth over the last five years was exceptional
- Offerings are difficult to replicate at scale and lead to a best-in-class gross margin of 52.2%
- Strong free cash flow margin of 16.1% enables it to reinvest or return capital consistently, and its recently improved profitability means it has even more resources to invest or distribute
Rollins is trading at $56.67 per share, or 44.6x 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
ALSO WORTH WATCHING: Top 5 Momentum Stocks. The best time to own a great stock is when the market is finally noticing it. These aren't just high-quality businesses. Something is happening with them right now. Elite fundamentals meeting near-term momentum — both boxes checked at the same time.
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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-micro-cap company Kadant (+351% five-year return). Find your next big winner with StockStory today.
