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Industrials businesses quietly power the physical things we depend on, from cars and homes to e-commerce infrastructure. Still, their generally high capital requirements expose them to the ups and downs of economic cycles, and the industry’s six-month return of 1.8% has fallen short of the S&P 500’s 6.7% rise.

Despite the lackluster result, a few diamonds in the rough can produce earnings growth no matter what, and we started StockStory to help you find them. With that said, here is one industrials stock boasting a durable advantage and two that may face trouble.

Two Industrials Stocks to Sell:

Emerson Electric (EMR)

Market Cap: $65.32 billion

Founded in 1890, Emerson Electric (NYSE:EMR) is a multinational technology and engineering company providing solutions in the industrial, commercial, and residential markets.

Why Is EMR Not Exciting?

1. Sales were flat over the last five years, indicating it’s failed to expand this cycle

2. Estimated sales growth of 4.7% for the next 12 months implies demand will slow from its two-year trend

3. Shrinking returns on capital suggest that increasing competition is eating into the company’s profitability

At $115.84 per share, Emerson Electric trades at 19.2x forward price-to-earnings. To fully understand why you should be careful with EMR, check out our full research report (it’s free) .

RXO (RXO)

Market Cap: $3.34 billion

With access to millions of trucks, RXO (NYSE:RXO) offers full-truckload, less-than-truckload, and last-mile deliveries.

Why Should You Sell RXO?

1. Customers postponed purchases of its products and services this cycle as its revenue declined by 2.6% annually over the last two years

2. Incremental sales over the last four years were much less profitable as its earnings per share fell by 27.6% annually while its revenue grew

3. Short cash runway increases the probability of a capital raise that dilutes existing shareholders

RXO is trading at $20.36 per share, or 48.8x forward price-to-earnings. Check out our free in-depth research report to learn more about why RXO doesn’t pass our bar .

One Industrials Stock to Buy:

First Solar (FSLR)

Market Cap: $14.01 billion

Headquartered in Arizona, First Solar (NASDAQ:FSLR) specializes in manufacturing solar panels and providing photovoltaic solar energy solutions.

Why Is FSLR a Good Business?

1. Annual revenue growth of 26.7% over the last two years was superb and indicates its market share increased during this cycle

2. Performance over the past two years shows its incremental sales were extremely profitable, as its annual earnings per share growth of 453% outpaced its revenue gains

3. Negative free cash flow margin has improved over the last five years, showing the company is one step closer to financial self-sufficiency

First Solar’s stock price of $129.65 implies a valuation ratio of 6.2x forward price-to-earnings. Is now the time to initiate a position? See for yourself in our comprehensive research report, it’s free .

Stocks We Like Even More

The elections are now behind us. With rates dropping and inflation cooling, many analysts expect a breakout market - and we’re zeroing in on the stocks that could benefit immensely.

Take advantage of the rebound by checking out our Top 9 Market-Beating Stocks . This is a curated list of our High Quality stocks that have generated a market-beating return of 175% over the last five years.

Stocks that made our list in 2019 include now familiar names such as Nvidia (+2,183% between December 2019 and December 2024) as well as under-the-radar businesses like United Rentals (+322% five-year return). Find your next big winner with StockStory today for free .