Whether you see them or not, industrials businesses play a crucial part in our daily activities. Their momentum is also rising as lower interest rates have incentivized higher capital spending, and as a result, the industry has posted a six-month gain of 5.6%. This was a good place to be as the S&P 500 fell by 2%.
Nevertheless, investors must be mindful as the cycle can unexpectedly turn. When this inevitably happens, only the elite companies will survive and ultimately thrive. Keeping that in mind, here are two industrials stocks we think can generate sustainable market-beating returns and one we’re swiping left on.
One Industrials Stock to Sell:
Hertz (HTZ)
Market Cap: $1.66 billion
Started with a dozen Model T Fords, Hertz (NASDAQ: HTZ) is a global car rental company providing vehicle rental services to leisure and business travelers.
Why Should You Sell HTZ?
- Sales tumbled by 4.7% annually over the last two years, showing market trends are working against its favor during this cycle
- Diminishing returns on capital suggest its earlier profit pools are drying up
- 18× net-debt-to-EBITDA ratio shows it’s overleveraged and increases the probability of shareholder dilution if things turn unexpectedly
At $5.22 per share, Hertz trades at 129.7x forward EV-to-EBITDA. To fully understand why you should be careful with HTZ, check out our full research report (it’s free).
Two Industrials Stocks to Watch:
RBC Bearings (RBC)
Market Cap: $17.47 billion
With a Guinness World Record for engineering the largest spherical plain bearing, RBC Bearings (NYSE: RBC) is a manufacturer of bearings and related components for the aerospace & defense, industrial, and transportation industries.
Why Will RBC Beat the Market?
- Annual revenue growth of 23.1% over the last five years was superb and indicates its market share increased during this cycle
- Earnings per share grew by 18.3% annually over the last two years, massively outpacing its peers
- Impressive free cash flow profitability enables the company to fund new investments or reward investors with share buybacks/dividends
RBC Bearings’s stock price of $552.59 implies a valuation ratio of 40.4x forward P/E. Is now the time to initiate a position? Find out in our full research report, it’s free.
Valmont (VMI)
Market Cap: $7.88 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 Does VMI Stand Out?
- Earnings per share grew by 62% annually over the last two years and trumped its peers
- Free cash flow margin expanded by 8.8 percentage points over the last five years, providing additional flexibility for investments and share buybacks/dividends
- Industry-leading 12.6% return on capital demonstrates management’s skill in finding high-return investments, and its returns are growing as it capitalizes on even better market opportunities
Valmont is trading at $401.87 per share, or 18.3x 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
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 (+1,326% between June 2020 and June 2025) as well as under-the-radar businesses like the once-micro-cap company Kadant (+351% five-year return). Find your next big winner with StockStory today.
