Industrials businesses quietly power the physical things we depend on, from cars and homes to e-commerce infrastructure. Their momentum is also rising as lower interest rates have incentivized higher capital spending. As a result, the industry has posted a 20.3% gain over the past six months, beating the S&P 500 by 10.5 percentage points.
Although these companies have produced results lately, a cautious approach is imperative. When the cycle naturally turns, the losers can be left for dead while the winners consolidate and take more of the market. Taking that into account, here is one resilient industrials stock at the top of our wish list and two that may face trouble.
Two Industrials Stocks to Sell:
SmartRent (SMRT)
Market Cap: $213.4 million
Founded by an employee at a real estate rental company, SmartRent (NYSE: SMRT) provides smart home devices and software for multifamily residential properties, single-family rental homes, and student housing communities.
Why Does SMRT Fall Short?
- Products and services are facing significant end-market challenges during this cycle as sales have declined by 17.9% annually over the last two years
- Historically negative EPS casts doubt for cautious investors and clouds its long-term earnings prospects
- Cash-burning tendencies make us wonder if it can sustainably generate shareholder value
SmartRent’s stock price of $1.26 implies a valuation ratio of 1.3x forward price-to-sales. If you’re considering SMRT for your portfolio, see our FREE research report to learn more.
Ameresco (AMRC)
Market Cap: $1.53 billion
Having played a role in upgrading the energy solutions of Alcatraz Island, Ameresco (NYSE: AMRC) provides energy and renewable energy solutions for various sectors.
Why Are We Cautious About AMRC?
- Issuance of new shares over the last five years caused its earnings per share to fall by 12% annually while its revenue grew
- Cash-burning history makes us doubt the long-term viability of its business model
- Short cash runway increases the probability of a capital raise that dilutes existing shareholders
At $29.01 per share, Ameresco trades at 24.6x forward P/E. Dive into our free research report to see why there are better opportunities than AMRC.
One Industrials Stock to Buy:
AZZ (AZZ)
Market Cap: $4.31 billion
Responsible for projects like nuclear facilities, AZZ (NYSE: AZZ) is a provider of metal coating and power infrastructure solutions.
Why Do We Love AZZ?
- Annual revenue growth of 14.5% over the past five years was outstanding, reflecting market share gains this cycle
- Earnings per share grew by 23.9% annually over the last five years and trumped its peers
- Free cash flow margin grew by 23 percentage points over the last five years, giving the company more chips to play with
AZZ is trading at $144.27 per share, or 21.6x forward P/E. Is now the right time to buy? Find out in our full research report, it’s free.
Stocks We Like Even More
ONE MORE THING: Top 5 Growth Stocks. The biggest stock winners almost always had one thing in common before they ran. Revenue growing like crazy. Meta. CrowdStrike. Broadcom. Our AI flagged all three. They returned 315%, 314%, and 455%, respectively.
Find out which 5 stocks it's flagging for this month - FREE. Get Our Top 5 Growth 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-small-cap company Comfort Systems (+782% five-year return). Find your next big winner with StockStory today.
