Even if they go mostly unnoticed, industrial businesses are the backbone of our country. 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 16.5% for the sector - higher than the S&P 500’s 14.1% return.
Although these companies have produced results lately, a cautious approach is imperative. When the cycle naturally turns, the losers can be left for dead while the winners consolidate and take more of the market. On that note, here is one industrials stock boasting a durable advantage and two we’re passing on.
Two Industrials Stocks to Sell:
Arrow Electronics (ARW)
Market Cap: $5.79 billion
Founded as a single retail store, Arrow Electronics (NYSE: ARW) provides electronic components and enterprise computing solutions to businesses globally.
Why Do We Think ARW Will Underperform?
- Annual sales declines of 7.8% for the past two years show its products and services struggled to connect with the market during this cycle
- Sales were less profitable over the last two years as its earnings per share fell by 28.5% annually, worse than its revenue declines
- Diminishing returns on capital suggest its earlier profit pools are drying up
At $112.46 per share, Arrow Electronics trades at 9.8x forward P/E. If you’re considering ARW for your portfolio, see our FREE research report to learn more.
FuelCell Energy (FCEL)
Market Cap: $399 million
Founded in 1969, FuelCell Energy (NASDAQ: FCEL) is a leading manufacturer and developer of carbonate fuel cell technology for stationary power generation.
Why Is FCEL Not Exciting?
- 4.3% annual revenue growth over the last two years was slower than its industrials peers
- Negative free cash flow raises questions about the return timeline for its investments
- Short cash runway increases the probability of a capital raise that dilutes existing shareholders
FuelCell Energy’s stock price of $8.44 implies a valuation ratio of 1.1x forward price-to-sales. Check out our free in-depth research report to learn more about why FCEL doesn’t pass our bar.
One Industrials Stock to Watch:
Carlisle (CSL)
Market Cap: $13.49 billion
Originally founded as Carlisle Tire and Rubber Company, Carlisle Companies (NYSE: CSL) is a multi-industry product manufacturer focusing on construction materials and weatherproofing technologies.
Why Are We Fans of CSL?
- Excellent operating margin of 19.5% highlights the efficiency of its business model, and its operating leverage amplified its profits over the last five years
- Share repurchases over the last five years enabled its annual earnings per share growth of 24.7% to outpace its revenue gains
- Robust free cash flow margin of 15.3% gives it many options for capital deployment, and its growing cash flow gives it even more resources to deploy
Carlisle is trading at $323.67 per share, or 16.1x forward P/E. Is now the time to initiate a position? See for yourself in our comprehensive research report, it’s free for active Edge members .
Stocks We Like Even More
The market’s up big this year - but there’s a catch. Just 4 stocks account for half the S&P 500’s entire gain. That kind of concentration makes investors nervous, and for good reason. While everyone piles into the same crowded names, smart investors are hunting quality where no one’s looking - and paying a fraction of the price. Check out the high-quality names we’ve flagged in our Top 5 Strong Momentum Stocks for this week. 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 for free. Find your next big winner with StockStory today. Find your next big winner with StockStory today
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