Even if they go mostly unnoticed, industrial businesses are the backbone of our country. But their prominence also brings high exposure to the ups and downs of economic cycles. Luckily, the tide is turning in their favor as the industry’s 17.8% return over the past six months has topped the S&P 500 by 4.2 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. With that said, here are two resilient industrials stocks at the top of our wish list and one we’re swiping left on.
One Industrials Stock to Sell:
TopBuild (BLD)
Market Cap: $12.3 billion
Established in 2015 following a spinoff from Masco Corporation, TopBuild (NYSE: BLD) is a distributor and installer of insulation and other building products.
Why Are We Wary of BLD?
- Sales stagnated over the last two years and signal the need for new growth strategies
- Organic revenue growth fell short of our benchmarks over the past two years and implies it may need to improve its products, pricing, or go-to-market strategy
- Earnings growth underperformed the sector average over the last two years as its EPS grew by just 2.5% annually
TopBuild’s stock price of $433.16 implies a valuation ratio of 20.4x forward P/E. Check out our free in-depth research report to learn more about why BLD doesn’t pass our bar.
Two Industrials Stocks to Watch:
TransDigm (TDG)
Market Cap: $73.38 billion
Supplying parts for nearly all aircraft currently in service, TransDigm (NYSE: TDG) develops and manufactures components and systems for military and commercial aviation.
Why Should You Buy TDG?
- Core business can prosper without any help from acquisitions as its organic revenue growth averaged 11.9% over the past two years
- Performance over the past two years shows its incremental sales were extremely profitable, as its annual earnings per share growth of 20.2% outpaced its revenue gains
- Robust free cash flow margin of 19.6% gives it many options for capital deployment, and its rising cash conversion increases its margin of safety
TransDigm is trading at $1,307 per share, or 34.2x forward P/E. Is now a good time to buy? See for yourself in our in-depth research report, it’s free for active Edge members.
Distribution Solutions (DSGR)
Market Cap: $1.32 billion
Founded in 1952, Distribution Solutions (NASDAQ: DSGR) provides supply chain solutions and distributes industrial, safety, and maintenance products to various industries.
Why Are We Positive On DSGR?
- Impressive 15.1% annual revenue growth over the last two years indicates it’s winning market share this cycle
- Solid gross margin and unit economics free up capital for marketing and product development efforts
- Earnings per share grew by 34.8% annually over the last two years and trumped its peers
At $28.48 per share, Distribution Solutions trades at 17.4x forward P/E. Is now the right time to buy? Find out in our full research report, it’s free for active Edge members.
Stocks We Like Even More
Your portfolio can’t afford to be based on yesterday’s story. The risk in a handful of heavily crowded stocks is rising daily.
The names generating the next wave of massive growth are right here in 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 244% over the last five years (as of June 30, 2025).
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 Exlservice (+354% 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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