Whether you see them or not, industrials businesses play a crucial part in our daily activities. 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 8.3% over the past six months. This performance is a noticeable divergence from the S&P 500’s 11.2% return.
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. On that note, here are two industrials stocks boasting durable advantages and one best left ignored.
One Industrials Stock to Sell:
Kadant (KAI)
Market Cap: $3.06 billion
Headquartered in Massachusetts, Kadant (NYSE:KAI) is a global supplier of high-value, critical components and engineered systems used in process industries worldwide.
Why Are We Wary of KAI?
- Sales trends were unexciting over the last two years as its 7% annual growth was below the typical industrials company
- Annual earnings per share growth of 4% underperformed its revenue over the last two years, showing its incremental sales were less profitable
- Waning returns on capital imply its previous profit engines are losing steam
At $258.66 per share, Kadant trades at 20.6x forward P/E. Check out our free in-depth research report to learn more about why KAI doesn’t pass our bar.
Two Industrials Stocks to Watch:
TransDigm (TDG)
Market Cap: $61.34 billion
Supplying parts for nearly all aircraft currently in service, TransDigm (NYSE:TDG) develops and manufactures components and systems for military and commercial aviation.
Why Is TDG a Top Pick?
- Existing business lines can expand without risky acquisitions as its organic revenue growth averaged 9.3% over the past two years
- Performance over the past five years was turbocharged by share buybacks, which enabled its earnings per share to grow faster than its revenue
- Strong free cash flow margin of 20% enables it to reinvest or return capital consistently, and its growing cash flow gives it even more resources to deploy
TransDigm’s stock price of $1,107 implies a valuation ratio of 23.9x forward P/E. Is now the time to initiate a position? See for yourself in our in-depth research report, it’s free.
FTAI Infrastructure (FIP)
Market Cap: $273 million
Spun off from FTAI Aviation in 2021, FTAI Infrastructure (NASDAQ:FIP) invests in and operates infrastructure and related assets across the transportation and energy sectors.
Why Do We Like FIP?
- Impressive 41.4% annual revenue growth over the last two years indicates it’s winning market share this cycle
- Notable projected revenue growth of 14.9% for the next 12 months hints at market share gains
- Gross margin of 30.1% is reasonable for the industry and allows for steady investments in marketing and R&D
FTAI Infrastructure is trading at $2.31 per share, or 8.2x forward EV-to-EBITDA. Is now a good time to buy? Find out in our full 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-small-cap company Comfort Systems (+1,154% between June 2020 and June 2025). Find your next big winner with StockStory today.