Even if they go mostly unnoticed, industrial businesses are the backbone of our country. But they are at the whim of volatile macroeconomic factors that influence capital spending (like interest rates), and the industry has underperformed the market over the past six months as its 1.3% return lagged the S&P 500 by 9.7 percentage points.
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. Keeping that in mind, here is one industrials stock boasting a durable advantage and two we’re steering clear of.
Two Industrials Stocks to Sell:
Trinity (TRN)
Market Cap: $2.47 billion
Operating under the trade name TrinityRail, Trinity (NYSE:TRN) is a provider of railcar products and services in North America.
Why Are We Hesitant About TRN?
- Product roadmap and go-to-market strategy need to be reconsidered as its backlog has averaged 24.9% declines over the past two years
- Sales are projected to be flat over the next 12 months and imply weak demand
- Negative free cash flow raises questions about the return timeline for its investments
Trinity’s stock price of $30.97 implies a valuation ratio of 18.4x forward P/E. Check out our free in-depth research report to learn more about why TRN doesn’t pass our bar.
Universal Logistics (ULH)
Market Cap: $484.7 million
Founded in 1932, Universal Logistics (NASDAQ:ULH) is a provider of customized transportation and logistics solutions operating throughout the United States and in Mexico, Canada, and Colombia.
Why Should You Sell ULH?
- Sales stagnated over the last five years and signal the need for new growth strategies
- Waning returns on capital imply its previous profit engines are losing steam
- High net-debt-to-EBITDA ratio of 20× increases the risk of forced asset sales or dilutive financing if operational performance weakens
At $18.35 per share, Universal Logistics trades at 18.6x forward P/E. Dive into our free research report to see why there are better opportunities than ULH.
One Industrials Stock to Watch:
Valmont (VMI)
Market Cap: $9.50 billion
Credited with an invention in the 1950s that improved crop yields, Valmont (NYSE:VMI) provides engineered products and infrastructure services for the agricultural industry.
Why Are We Fans of VMI?
- Operating margin improvement of 5.1 percentage points over the last five years demonstrates its ability to scale efficiently
- Performance over the past two years was turbocharged by share buybacks, which enabled its earnings per share to grow faster than its revenue
- Free cash flow margin grew by 8.7 percentage points over the last five years, giving the company more chips to play with
Valmont is trading at $492.50 per share, or 2.1x forward price-to-sales. Is now a good time to buy? Find out in our full research report, it’s free.
Stocks We Like Even More
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.
But our AI platform says the party isn’t over. Find out which 9 stocks made the cut this week — FREE. Get Our Top 9 Market-Beating 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-micro-cap company Tecnoglass (+1,552% between June 2020 and June 2025). Find your next big winner with StockStory today.