Industrials businesses quietly power the physical things we depend on, from cars and homes to e-commerce infrastructure. They are also bound to benefit from a friendlier regulatory environment with the Trump administration, and this excitement has led to a six-month gain of 18.8% for the sector - higher than the S&P 500’s 7.3% return.
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. Keeping that in mind, 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:
Timken (TKR)
Market Cap: $7.48 billion
Established after the founder noticed the difficulty freight wagons had making sharp turns, Timken (NYSE: TKR) is a provider of industrial parts used across various sectors.
Why Are We Out on TKR?
- 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 3.4%
- Earnings per share have dipped by 12.9% annually over the past two years, which is concerning because stock prices follow EPS over the long term
Timken’s stock price of $107.35 implies a valuation ratio of 18.5x forward P/E. If you’re considering TKR for your portfolio, see our FREE research report to learn more.
SolarEdge (SEDG)
Market Cap: $2.06 billion
Established in 2006, SolarEdge (NASDAQ: SEDG) creates advanced systems to improve the efficiency of solar panels.
Why Should You Dump SEDG?
- Performance surrounding its megawatts shipped has lagged its peers
- Waning returns on capital from an already weak starting point displays the inefficacy of management’s past and current investment decisions
- Negative earnings profile makes it challenging to secure favorable financing terms from lenders
SolarEdge is trading at $34.54 per share, or 1.6x forward price-to-sales. Dive into our free research report to see why there are better opportunities than SEDG.
One Industrials Stock to Watch:
Limbach (LMB)
Market Cap: $1.06 billion
Established in 1901, Limbach (NASDAQ: LMB) provides integrated building systems solutions, including mechanical, electrical, and plumbing services.
Why Could LMB Be a Winner?
- Operating margin expansion of 6 percentage points over the last five years shows the company optimized its expenses
- Incremental sales over the last two years have been highly profitable as its earnings per share increased by 42.5% annually, topping its revenue gains
- Free cash flow margin increased by 8 percentage points over the last five years, giving the company more capital to invest or return to shareholders
At $91.81 per share, Limbach trades at 22.1x forward P/E. Is now a good time to buy? See for yourself in our comprehensive research report, it’s free.
Stocks We Like Even More
Your portfolio can’t afford to be based on yesterday’s story. The risk in a handful of heavily crowded stocks is rising daily.
The names generating the next wave of massive growth are right here in 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 244% over the last five years (as of June 30, 2025).
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-small-cap company Exlservice (+354% five-year return). Find your next big winner with StockStory today.
