Even if they go mostly unnoticed, industrial businesses are the backbone of our country. Their momentum is also rising as lower interest rates have incentivized higher capital spending. As a result, the industry has posted a 37.5% gain over the past six months, beating the S&P 500 by 12.8 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 are two industrials stocks boasting durable advantages and one we’re steering clear of.
One Industrials Stock to Sell:
ChargePoint (CHPT)
Market Cap: $264.4 million
The most prominent EV charging company during the COVID bull market, ChargePoint (NYSE:CHPT) is a provider of electric vehicle charging technology solutions in North America and Europe.
Why Are We Cautious About CHPT?
- Sales tumbled by 15.6% annually over the last two years, showing market trends are working against its favor during this cycle
- Negative free cash flow raises questions about the return timeline for its investments
- Depletion of cash reserves could lead to a fundraising event that triggers shareholder dilution
At $11.35 per share, ChargePoint trades at 0.6x forward price-to-sales. Check out our free in-depth research report to learn more about why CHPT doesn’t pass our bar.
Two Industrials Stocks to Buy:
Rollins (ROL)
Market Cap: $28.26 billion
Operating under multiple brands like Orkin and HomeTeam Pest Defense, Rollins (NYSE:ROL) provides pest and wildlife control services to residential and commercial customers.
Why Will ROL Beat the Market?
- Market share has increased this cycle as its 11.5% annual revenue growth over the last two years was exceptional
- Offerings are mission-critical for businesses and result in a best-in-class gross margin of 52.2%
- Impressive free cash flow profitability enables the company to fund new investments or reward investors with share buybacks/dividends
Rollins’s stock price of $58.31 implies a valuation ratio of 50x forward P/E. Is now the time to initiate a position? See for yourself in our comprehensive research report, it’s free.
ESCO (ESE)
Market Cap: $5.45 billion
A developer of the communication systems used in the Batmobile of “The Dark Knight,” ESCO (NYSE:ESE) is a provider of engineered components for the aerospace, defense, and utility sectors.
Why Are We Bullish on ESE?
- Demand for the next 12 months is expected to accelerate above its two-year trend as Wall Street forecasts robust revenue growth of 23.1%
- Offerings are mission-critical for businesses and lead to a top-tier gross margin of 39.1%
- Performance over the past two years shows its incremental sales were extremely profitable, as its annual earnings per share growth of 22.4% outpaced its revenue gains
ESCO is trading at $210.95 per share, or 32x 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
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 6 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-small-cap company Comfort Systems (+782% 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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