Whether you see them or not, industrials businesses play a crucial part in our daily activities. But their prominence also brings high exposure to the ups and downs of economic cycles. Luckily, the tide is turning in their favor as the industry’s 21.6% return over the past six months has topped the S&P 500 by 8.3 percentage points.
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. Taking that into account, here are two resilient industrials stocks at the top of our wish list and one we’re steering clear of.
One Industrials Stock to Sell:
Illinois Tool Works (ITW)
Market Cap: $71.26 billion
Founded by Byron Smith, an investor who held over 100 patents, Illinois Tool Works (NYSE: ITW) manufactures engineered components and specialized equipment for numerous industries.
Why Do We Think Twice About ITW?
- Core business is underperforming as its organic revenue has disappointed over the past two years, suggesting it might need acquisitions to stimulate growth
- Anticipated sales growth of 3.1% for the next year implies demand will be shaky
- Earnings growth over the last two years fell short of the peer group average as its EPS only increased by 3.1% annually
Illinois Tool Works is trading at $247.67 per share, or 22x forward P/E. Dive into our free research report to see why there are better opportunities than ITW.
Two Industrials Stocks to Watch:
Clean Harbors (CLH)
Market Cap: $16.05 billion
Established in 1980, Clean Harbors (NYSE: CLH) provides environmental and industrial services like hazardous and non-hazardous waste disposal and emergency spill cleanups.
Why Do We Like CLH?
- Market share has increased this cycle as its 14.4% annual revenue growth over the last five years was exceptional
- Share repurchases over the last five years enabled its annual earnings per share growth of 24.9% to outpace its revenue gains
- Free cash flow margin expanded by 5.3 percentage points over the last five years, providing additional flexibility for investments and share buybacks/dividends
Clean Harbors’s stock price of $306.94 implies a valuation ratio of 34.8x forward P/E. Is now the right time to buy? Find out in our full research report, it’s free.
SPX Technologies (SPXC)
Market Cap: $10.06 billion
With roots dating back to 1912 as the Piston Ring Company, SPX Technologies (NYSE: SPXC) supplies specialized infrastructure equipment for HVAC systems and detection and measurement applications across industrial, commercial, and utility markets.
Why Should You Buy SPXC?
- Annual revenue growth of 15.1% over the last five years was superb and indicates its market share increased during this cycle
- Incremental sales significantly boosted profitability as its annual earnings per share growth of 23.6% over the last two years outstripped its revenue performance
- Free cash flow margin jumped by 8.1 percentage points over the last five years, giving the company more resources to pursue growth initiatives, repurchase shares, or pay dividends
At $201.07 per share, SPX Technologies trades at 3.9x forward price-to-sales. Is now a good time to buy? See for yourself in our in-depth research report, it’s free.
Stocks We Like Even More
ALSO WORTH WATCHING: Top 5 Momentum Stocks. The best time to own a great stock is when the market is finally noticing it. These aren't just high-quality businesses. Something is happening with them right now. Elite fundamentals meeting near-term momentum - both boxes checked at the same time.
Find out which stocks our AI platform is flagging this week. See this week's Strong Momentum stocks - FREE. Get Our Strong Momentum Stocks for Free HERE.
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.
