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 36% for the sector - higher than the S&P 500’s 22.9% return.
Nevertheless, investors must be mindful as the cycle can unexpectedly turn. When this inevitably happens, only the elite companies will survive and ultimately thrive. On that note, here are two industrials stocks boasting durable advantages and one best left ignored.
One Industrials Stock to Sell:
XPO (XPO)
Market Cap: $14.77 billion
Owning a mobile game simulating freight operations for the Tour de France, XPO (NYSE: XPO) is a transportation company specializing in expedited shipping services.
Why Do We Steer Clear of XPO?
- Products and services are facing significant end-market challenges during this cycle as sales have declined by 6.5% annually over the last five years
- Earnings per share were flat over the last two years and fell short of the peer group average
- 7.2 percentage point decline in its free cash flow margin over the last five years reflects the company’s increased investments to defend its market position
XPO is trading at $125.45 per share, or 30.5x forward P/E. Read our free research report to see why you should think twice about including XPO in your portfolio.
Two Industrials Stocks to Watch:
DXP (DXPE)
Market Cap: $1.84 billion
Founded during the emergence of Big Oil in Texas, DXP (NASDAQ: DXPE) provides pumps, valves, and other industrial components.
Why Does DXPE Stand Out?
- Annual revenue growth of 10.4% over the last five years beat the sector average and underscores the unique value of its offerings
- Operating margin expanded by 5.2 percentage points over the last five years as it scaled and became more efficient
- Share buybacks catapulted its annual earnings per share growth to 32.6%, which outperformed its revenue gains over the last two years
At $117.82 per share, DXP trades at 17.9x forward P/E. Is now a good time to buy? See for yourself in our full research report, it’s free for active Edge members.
Waste Management (WM)
Market Cap: $87.06 billion
Headquartered in Houston, Waste Management (NYSE: WM) is a provider of comprehensive waste management services in North America.
Why Are We Fans of WM?
- Annual revenue growth of 9.7% over the last five years beat the sector average and underscores the unique value of its offerings
- Offerings are mission-critical for businesses and lead to a stellar gross margin of 38.6%
- Excellent operating margin of 17.4% highlights the efficiency of its business model
Waste Management’s stock price of $216.51 implies a valuation ratio of 27.3x forward P/E. Is now the right time to buy? Find out in our full research report, it’s free for active Edge members.
High-Quality Stocks for All Market Conditions
Trump’s April 2025 tariff bombshell triggered a massive market selloff, but stocks have since staged an impressive recovery, leaving those who panic sold on the sidelines.
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