Whether you see them or not, industrials businesses play a crucial part in our daily activities. But they are at the whim of volatile macroeconomic factors that influence capital spending (like interest rates), and the industry has underperformed the market over the past six months as its 3.1% return lagged the S&P 500 by 13.7 percentage points.
Only some companies are subject to these dynamics, however, and a handful of high-quality businesses can deliver earnings growth in any environment. With that said, here are two industrials stocks we think can generate sustainable market-beating returns and one we would avoid.
One Industrials Stock to Sell:
Genco (GNK)
Market Cap: $1.20 billion
Headquartered in NYC, Genco (NYSE:GNK) is a shipping company that transports dry bulk cargo along worldwide maritime routes.
Why Should You Sell GNK?
- Number of owned vessels has disappointed over the past two years, indicating weak demand for its offerings
- Earnings per share were flat over the last two years while its revenue grew, showing its incremental sales were less profitable
- Free cash flow margin shrank by 81.8 percentage points over the last five years, suggesting the company is consuming more capital to stay competitive
Genco’s stock price of $27.63 implies a valuation ratio of 11.9x forward P/E. Read our free research report to see why you should think twice about including GNK in your portfolio.
Two Industrials Stocks to Watch:
AMETEK (AME)
Market Cap: $57.76 billion
Started from its humble beginnings in motor repair, AMETEK (NYSE:AME) manufactures electronic devices used in industries like aerospace, power, and healthcare.
Why Is AME a Top Pick?
- 9.8% annual revenue growth over the last five years surpassed the sector average as its offerings resonated with customers
- Highly efficient business model is illustrated by its impressive 25.4% operating margin, and its operating leverage amplified its profits over the last five years
- Robust free cash flow margin of 21.7% gives it many options for capital deployment, and its improved cash conversion implies it’s becoming a less capital-intensive business
AMETEK is trading at $253.56 per share, or 28.6x forward P/E. Is now the time to initiate a position? Find out in our full research report, it’s free.
Novanta (NOVT)
Market Cap: $5.70 billion
Originally a pioneer in the laser scanning industry during the late 1960s, Novanta (NASDAQ:NOVT) offers medicine and manufacturing technology to the medical, life sciences, and manufacturing industries.
Why Is NOVT Interesting?
- Annual revenue growth of 10.7% over the last five years was superb and indicates its market share increased during this cycle
- Projected revenue growth of 20.5% for the next 12 months is above its two-year trend, pointing to accelerating demand
- Offerings are difficult to replicate at scale and lead to a premier gross margin of 44.4%
At $149.16 per share, Novanta trades at 37.4x forward P/E. Is now a good time to buy? See for yourself in our comprehensive research report, it’s free.
Stocks We Like Even More
WHILE YOU’RE HERE: Top 9 Market-Beating Stocks. The best stocks don’t just beat the market once. They do it again. And again. Robust revenue growth, rising free cash flow, returns on capital that leave their competition in the dust. The market has already rewarded these businesses.
But our AI platform says the party isn’t over. Find out which 9 stocks made the cut this week — FREE. Get Our Top 9 Market-Beating Stocks for Free HERE.
Stocks that made our list in 2020 include now familiar names such as Nvidia (+1,460% between June 2020 and June 2025) as well as under-the-radar businesses like the once-small-cap company Comfort Systems (+1,154% between June 2020 and June 2025). Find your next big winner with StockStory today.