Even if they go mostly unnoticed, industrial businesses are the backbone of our country. Still, their generally high capital requirements expose them to the ups and downs of economic cycles, and the industry’s six-month return of 4.9% has fallen short of the S&P 500’s 18% rise.
Despite the lackluster result, a few diamonds in the rough can produce earnings growth no matter what, and we started StockStory to help you find them. With that said, here is one resilient industrials stock at the top of our wish list and two we’re steering clear of.
Two Industrials Stocks to Sell:
nLIGHT (LASR)
Market Cap: $2.38 billion
Founded by a former CEO and Harvard-educated entrepreneur Scott Keeneyn, nLIGHT (NASDAQ: LASR) offers semiconductor and fiber lasers to the industrial, aerospace & defense, and medical sectors.
Why Do We Think Twice About LASR?
- Annual revenue growth of 3.8% over the last five years was below our standards for the industrials sector
- Persistent operating margin losses suggest the business manages its expenses poorly
- Cash burn makes us question whether it can achieve sustainable long-term growth
nLIGHT is trading at $40.91 per share, or 104.6x forward P/E. If you’re considering LASR for your portfolio, see our FREE research report to learn more.
Northrop Grumman (NOC)
Market Cap: $72.43 billion
Responsible for the development of the first stealth bomber, Northrop Grumman (NYSE: NOC) specializes in providing aerospace, defense, and security solutions for various industry applications.
Why Do We Think NOC Will Underperform?
- Absence of organic revenue growth over the past two years suggests it may have to lean into acquisitions to drive its expansion
- Demand will likely be soft over the next 12 months as Wall Street’s estimates imply tepid growth of 5.9%
- Earnings growth over the last five years fell short of the peer group average as its EPS only increased by 2.4% annually
At $509.70 per share, Northrop Grumman trades at 18x forward P/E. Dive into our free research report to see why there are better opportunities than NOC.
One Industrials Stock to Watch:
AAON (AAON)
Market Cap: $6.54 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 Does AAON Stand Out?
- Average backlog growth of 93.5% over the past two years shows it has a steady sales pipeline that will drive future orders
- Notable projected revenue growth of 27.2% for the next 12 months hints at market share gains
- Stellar returns on capital showcase management’s ability to surface highly profitable business ventures
AAON’s stock price of $79.69 implies a valuation ratio of 28.1x forward P/E. Is now the right time to buy? See for yourself in our comprehensive research report, it’s free.
High-Quality Stocks for All Market Conditions
WHILE YOU’RE HERE: Top 9 Market-Beating Stocks. The best stocks don’t just beat the market once. They do it again. And again. Robust revenue growth, rising free cash flow, returns on capital that leave their competition in the dust. The market has already rewarded these businesses.
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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-small-cap company Exlservice (+271% between June 2020 and June 2025). Find your next big winner with StockStory today.
