Even if they go mostly unnoticed, industrial businesses are the backbone of our country. They are also bound to benefit from a friendlier regulatory environment with the Trump administration, and this excitement has led to a six-month gain of 12.2% for the sector - higher than the S&P 500’s 4.7% return.
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. Keeping that in mind, here is one resilient industrials stock at the top of our wish list and two we’re steering clear of.
Two Industrials Stocks to Sell:
Griffon (GFF)
Market Cap: $4.13 billion
Initially in the defense industry, Griffon (NYSE: GFF) is a now diversified company specializing in home improvement, professional equipment, and building products.
Why Are We Cautious About GFF?
- Annual sales declines of 2.7% for the past two years show its products and services struggled to connect with the market during this cycle
- Sales are expected to decline once again over the next 12 months as it continues working through a challenging demand environment
Griffon’s stock price of $88.60 implies a valuation ratio of 17.6x forward P/E. If you’re considering GFF for your portfolio, see our FREE research report to learn more.
ArcBest (ARCB)
Market Cap: $2.83 billion
Historically owning furniture, banking, and other subsidiaries, ArcBest (NASDAQ: ARCB) offers full-truckload, less-than-truckload, and intermodal deliveries of freight.
Why Should You Sell ARCB?
- Underwhelming unit sales over the past two years show it’s struggled to increase its sales volumes and had to rely on price increases
- Performance over the past five years shows its incremental sales were much less profitable, as its earnings per share fell by 2% annually
- Eroding returns on capital suggest its historical profit centers are aging
At $127.04 per share, ArcBest trades at 22.4x forward P/E. Read our free research report to see why you should think twice about including ARCB in your portfolio.
One Industrials Stock to Watch:
Boeing (BA)
Market Cap: $176.7 billion
One of the companies that forms a duopoly in the commercial aircraft market, Boeing (NYSE: BA) develops, manufactures, and services commercial airplanes, defense products, and space systems.
Why Is BA on Our Radar?
- Average unit sales growth of 69.7% over the past two years reflects steady demand for its products
- Sales outlook for the upcoming 12 months implies the business will stay on its desirable two-year growth trajectory
- Additional sales over the last two years increased its profitability as the 47.6% annual growth in its earnings per share outpaced its revenue
Boeing is trading at $223.57 per share, or 316.9x forward P/E. Is now a good time to buy? See for yourself in our comprehensive research report, it’s free.
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