Whether you see them or not, industrials businesses play a crucial part in our daily activities. 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 45.4% return over the past six months has topped the S&P 500 by 12.7 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 is one industrials stock boasting a durable advantage and two best left ignored.
Two Industrials Stocks to Sell:
Arrow Electronics (ARW)
Market Cap: $6.26 billion
Founded as a single retail store, Arrow Electronics (NYSE:ARW) provides electronic components and enterprise computing solutions to businesses globally.
Why Do We Steer Clear of ARW?
- Customers postponed purchases of its products and services this cycle as its revenue declined by 10.8% annually over the last two years
- Sales were less profitable over the last two years as its earnings per share fell by 32.9% annually, worse than its revenue declines
- Shrinking returns on capital suggest that increasing competition is eating into the company’s profitability
Arrow Electronics’s stock price of $121.59 implies a valuation ratio of 4.9x forward EV-to-EBITDA. If you’re considering ARW for your portfolio, see our FREE research report to learn more.
EVgo (EVGO)
Market Cap: $670.8 million
Created through a settlement between NRG Energy and the California Public Utilities Commission, EVgo (NASDAQ:EVGO) is a provider of electric vehicle charging solutions, operating fast charging stations across the United States.
Why Are We Cautious About EVGO?
- Falling earnings per share over the last three years has some investors worried as stock prices ultimately follow EPS over the long term
- Negative free cash flow raises questions about the return timeline for its investments
- Unfavorable liquidity position could lead to additional equity financing that dilutes shareholders
At $4.99 per share, EVgo trades at 22.7x forward EV-to-EBITDA. Check out our free in-depth research report to learn more about why EVGO doesn’t pass our bar.
One Industrials Stock to Watch:
Tecnoglass (TGLS)
Market Cap: $3.11 billion
The first-ever Colombian company to trade on the NASDAQ, Tecnoglass (NYSE:TGLS) is a manufacturer of architectural glass, windows, and aluminum products.
Why Are We Fans of TGLS?
- Annual revenue growth of 20.3% over the past five years was outstanding, reflecting market share gains this cycle
- Highly efficient business model is illustrated by its impressive 27.3% operating margin, and its operating leverage amplified its profits over the last five years
- ROIC punches in at 28.9%, illustrating management’s expertise in identifying profitable investments, and its rising returns show it’s making even more lucrative bets
Tecnoglass is trading at $66.19 per share, or 14.7x forward P/E. Is now the time to initiate a position? See for yourself in our full research report, it’s free for active Edge members.
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 9 Market-Beating Stocks. 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 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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