Even if they go mostly unnoticed, industrial businesses are the backbone of our country. Still, their generally high capital requirements expose them to the ups and downs of economic cycles, and the market seems to be baking in a prolonged downturn as the industry has shed 6.6% over the past six months. This drop was worse than the S&P 500’s 1% loss.
Investors should tread carefully as timing cyclical companies is a challenging task, and any misstep can have you catching a falling knife. Keeping that in mind, here are three industrials stocks we’re swiping left on.
Carlisle (CSL)
Market Cap: $17.28 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 Are We Hesitant About CSL?
- Flat sales over the last two years suggest it must find different ways to grow during this cycle
- Core business is underperforming as its organic revenue has disappointed over the past two years, suggesting it might need acquisitions to stimulate growth
- Estimated sales growth of 5.1% for the next 12 months is soft and implies weaker demand
Carlisle’s stock price of $400.39 implies a valuation ratio of 17.7x forward P/E. Read our free research report to see why you should think twice about including CSL in your portfolio.
Woodward (WWD)
Market Cap: $12.1 billion
Initially designing controls for water wheels in the early 1900s, Woodward (NASDAQ: WWD) designs, services, and manufactures energy control products and optimization solutions.
Why Are We Wary of WWD?
- 2.8% annual revenue growth over the last five years was slower than its industrials peers
- Earnings per share lagged its peers over the last five years as they only grew by 3% annually
- Free cash flow margin dropped by 12.9 percentage points over the last five years, implying the company became more capital intensive as competition picked up
Woodward is trading at $203.33 per share, or 30.7x forward P/E. If you’re considering WWD for your portfolio, see our FREE research report to learn more.
Dover (DOV)
Market Cap: $25.45 billion
A company that manufactured critical equipment for the United States military during World War II, Dover (NYSE: DOV) manufactures engineered components and specialized equipment for numerous industries.
Why Should You Dump DOV?
- Absence of organic revenue growth over the past two years suggests it may have to lean into acquisitions to drive its expansion
- Earnings growth over the last two years fell short of the peer group average as its EPS only increased by 1.8% annually
- 3.3 percentage point decline in its free cash flow margin over the last five years reflects the company’s increased investments to defend its market position
At $186.35 per share, Dover trades at 19.5x forward P/E. Check out our free in-depth research report to learn more about why DOV doesn’t pass our bar.
Stocks We Like More
Donald Trump’s victory in the 2024 U.S. Presidential Election sent major indices to all-time highs, but stocks have retraced as investors debate the health of the economy and the potential impact of tariffs.
While this leaves much uncertainty around 2025, a few companies are poised for long-term gains regardless of the political or macroeconomic climate, like 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 176% over the last five years.
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 Tecnoglass (+1,754% five-year return). Find your next big winner with StockStory today for free.
