Industrials businesses quietly power the physical things we depend on, from cars and homes to e-commerce infrastructure. But they are at the whim of volatile macroeconomic factors that influence capital spending (like interest rates), and the industry has underperformed the market over the past six months as its 2.7% return lagged the S&P 500 by 2.7 percentage points.

Some companies can grow regardless of the economic backdrop, but the odds aren’t great for the ones we’re analyzing today. With that said, here are three industrials stocks we’re steering clear of.

Vicor (VICR)

Market Cap: $2.09 billion

Founded by a researcher at the Massachusetts Institute of Technology, Vicor (NASDAQ: VICR) provides electrical power conversion and delivery products for a range of industries.

Why Are We Wary of VICR?

1. Customers postponed purchases of its products and services this cycle as its revenue declined by 5% annually over the last two years
2. Performance over the past two years was negatively impacted by new share issuances as its earnings per share dropped by 12.9% annually, worse than its revenue
3. Shrinking returns on capital suggest that increasing competition is eating into the company’s profitability

Vicor’s stock price of $46.16 implies a valuation ratio of 28.7x forward P/E. To fully understand why you should be careful with VICR, check out our full research report (it’s free).

Moog (MOG.A)

Market Cap: $5.99 billion

Responsible for the flight control actuation system integrated in the B-2 stealth bomber, Moog (NYSE: MOG.A) provides precision motion control solutions used in aerospace and defense applications

Why Is MOG.A Not Exciting?

1. Muted 4.2% annual revenue growth over the last five years shows its demand lagged behind its industrials peers
2. Estimated sales growth of 1.7% for the next 12 months implies demand will slow from its two-year trend
3. Free cash flow margin shrank by 12.8 percentage points over the last five years, suggesting the company is consuming more capital to stay competitive

At $188.94 per share, Moog trades at 21.4x forward P/E. Check out our free in-depth research report to learn more about why MOG.A doesn’t pass our bar.

Stratasys (SSYS)

Market Cap: $938.7 million

Born from the Founder’s idea of making a toy frog with a glue gun, Stratasys (NASDAQ: SSYS) offers 3D printers and related materials, software, and services to many industries.

Why Do We Pass on SSYS?

1. Sales tumbled by 1.7% annually over the last five years, showing market trends are working against its favor during this cycle
2. Issuance of new shares over the last five years caused its earnings per share to fall by 13.6% annually, even worse than its revenue declines
3. Cash-burning history makes us doubt the long-term viability of its business model

Stratasys is trading at $10.95 per share, or 35.4x forward P/E. If you’re considering SSYS for your portfolio, see our FREE research report to learn more.

Stocks We Like More

Market indices reached historic highs following Donald Trump’s presidential victory in November 2024, but the outlook for 2025 is clouded by new trade policies that could impact business confidence and growth.

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