Whether you see them or not, industrials businesses play a crucial part in our daily activities. Their momentum is also rising as lower interest rates have incentivized higher capital spending. As a result, the industry has posted a 28.1% gain over the past six months, beating the S&P 500 by 9.5 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. On that note, here is one industrials stock poised to generate sustainable market-beating returns and two we’re passing on.
Two Industrials Stocks to Sell:
Ameresco (AMRC)
Market Cap: $1.8 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 Hesitant About AMRC?
- Gross margin of 16.5% reflects its high production costs
- Negative free cash flow raises questions about the return timeline for its investments
- Limited cash reserves may force the company to seek unfavorable financing terms that could dilute shareholders
At $34.16 per share, Ameresco trades at 30.9x forward P/E. To fully understand why you should be careful with AMRC, check out our full research report (it’s free).
Taylor Morrison Home (TMHC)
Market Cap: $6.57 billion
Named “America’s Most Trusted Home Builder” in 2019, Taylor Morrison Home (NYSE: TMHC) builds single family homes and communities across the United States.
Why Is TMHC Risky?
- Sales pipeline suggests its future revenue growth won’t meet our standards as its backlog averaged 12.7% declines over the past two years
- Estimated sales decline of 8.4% for the next 12 months implies an even more challenging demand environment
- Falling earnings per share over the last two years has some investors worried as stock prices ultimately follow EPS over the long term
Taylor Morrison Home’s stock price of $66.44 implies a valuation ratio of 8.7x forward P/E. If you’re considering TMHC for your portfolio, see our FREE research report to learn more.
One Industrials Stock to Watch:
Carlisle (CSL)
Market Cap: $14.25 billion
Originally founded as Carlisle Tire and Rubber Company, Carlisle Companies (NYSE: CSL) is a multi-industry product manufacturer focusing on construction materials and weatherproofing technologies.
Why Does CSL Stand Out?
- Excellent operating margin of 19.1% highlights the efficiency of its business model, and its rise over the last five years was fueled by some leverage on its fixed costs
- Share repurchases over the last five years enabled its annual earnings per share growth of 23% to outpace its revenue gains
- Free cash flow margin grew by 5.1 percentage points over the last five years, giving the company more chips to play with
Carlisle is trading at $334.78 per share, or 14.2x forward P/E. Is now a good time to buy? Find out in our full research report, it’s free.
Stocks We Like Even More
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.
Take advantage of the rebound by checking out our Top 5 Strong Momentum Stocks for this week. This is a curated list of our High Quality stocks that have generated a market-beating return of 183% over the last five years (as of March 31st 2025).
Stocks that made our list in 2020 include now familiar names such as Nvidia (+1,545% between March 2020 and March 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 for free. Find your next big winner with StockStory today. Find your next big winner with StockStory today
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