Whether you see them or not, industrials businesses play a crucial part in our daily activities. Unfortunately, this role also comes with a demand profile tethered to the ebbs and flows of the broader economy, and investors seem to be forecasting a downturn - over the past six months, the industry has pulled back by 5.4%. This drawdown was disheartening since the S&P 500 held its ground.

Despite the lackluster result, a few diamonds in the rough can produce earnings growth no matter what, and we started StockStory to help you find them. Taking that into account, here are two industrials stocks boasting durable advantages and one that may face trouble.

One Industrials Stock to Sell:

Expeditors (EXPD)

Market Cap: $16.27 billion

Expeditors (NYSE: EXPD) offers air and ocean freight as well as brokerage services.

Why Do We Avoid EXPD?

1. Sales tumbled by 21.2% annually over the last two years, showing market trends are working against its favor during this cycle
2. Earnings per share have dipped by 16.6% annually over the past two years, which is concerning because stock prices follow EPS over the long term
3. Diminishing returns on capital suggest its earlier profit pools are drying up

Expeditors’s stock price of $117.66 implies a valuation ratio of 21.9x forward price-to-earnings. Read our free research report to see why you should think twice about including EXPD in your portfolio.

Two Industrials Stocks to Watch:

Comfort Systems (FIX)

Market Cap: $13.45 billion

Formed through the merger of 12 companies, Comfort Systems (NYSE: FIX) provides mechanical and electrical contracting services.

Why Is FIX a Top Pick?

1. Sales pipeline is in good shape as its backlog averaged 36.3% growth over the past two years
2. Performance over the past two years shows its incremental sales were extremely profitable, as its annual earnings per share growth of 66.1% outpaced its revenue gains
3. Rising returns on capital show management is finding more attractive investment opportunities

Comfort Systems is trading at $380 per share, or 22.5x forward price-to-earnings. Is now a good time to buy? Find out in our full research report, it’s free.

Republic Services (RSG)

Market Cap: $73.7 billion

Processing several million tons of recyclables annually, Republic (NYSE: RSG) provides waste management services for residences, companies, and municipalities.

Why Does RSG Catch Our Eye?

1. Offerings and unique value proposition resonate with customers, as seen in its above-market 9.3% annual sales growth over the last five years
2. Highly efficient business model is illustrated by its impressive 18.4% operating margin, and it turbocharged its profits by achieving some fixed cost leverage
3. Impressive free cash flow profitability enables the company to fund new investments or reward investors with share buybacks/dividends, and its improved cash conversion implies it’s becoming a less capital-intensive business

At $236.50 per share, Republic Services trades at 34.7x forward price-to-earnings. Is now the time to initiate a position? See for yourself in our comprehensive research report, it’s free.

Stocks We Like Even More

With rates dropping, inflation stabilizing, and the elections in the rearview mirror, all signs point to the start of a new bull run - and we’re laser-focused on finding the best stocks for this upcoming cycle.

Put yourself in the driver’s seat by checking out our Top 6 Stocks for this week. This is a curated list of our High Quality stocks that have generated a market-beating return of 175% over the last five years.

Stocks that made our list in 2019 include now familiar names such as Nvidia (+2,183% between December 2019 and December 2024) as well as under-the-radar businesses like Axon (+711% five-year return). Find your next big winner with StockStory today for free.