Even if they go mostly unnoticed, industrial businesses are the backbone of our country. Sure, they are at the whim of macroeconomic factors that influence capital spending (like interest rates), but the industry has held its ground over the past six months as its 6% return was almost identical to the S&P 500.
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 are three industrials stocks we think can generate sustainable market-beating returns.
Graham Corporation (GHM)
Market Cap: $1.22 billion
Founded when its founder patented a unique design for a vacuum system used in the sugar refining process, Graham (NYSE: GHM) provides vacuum and heat transfer equipment for the energy, petrochemical, refining, and chemical sectors.
Why Is GHM a Good Business?
- Impressive 20.3% annual revenue growth over the last five years indicates it’s winning market share this cycle
- Operating margin improvement of 13.5 percentage points over the last five years demonstrates its ability to scale efficiently
- Incremental sales significantly boosted profitability as its annual earnings per share growth of 31.5% over the last two years outstripped its revenue performance
Graham Corporation’s stock price of $103.93 implies a valuation ratio of 56.3x forward P/E. Is now the right time to buy? Find out in our full research report, it’s free.
Byrna (BYRN)
Market Cap: $80.33 million
Providing civilians with tools to disable, disarm, and deter would-be assailants, Byrna (NASDAQ: BYRN) is a provider of non-lethal weapons.
Why Are We Bullish on BYRN?
- Annual revenue growth of 35.1% over the past two years was outstanding, reflecting market share gains this cycle
- Free cash flow profile has moved into break even territory, showing the company has crossed a key inflection point
- Improving returns on capital suggest its past investments are beginning to deliver value
At $3.60 per share, Byrna trades at 0.9x forward price-to-sales. Is now the time to initiate a position? See for yourself in our in-depth research report, it’s free.
Leidos (LDOS)
Market Cap: $14.11 billion
Formed through the split of IT services company SAIC, Leidos (NYSE: LDOS) offers technology and engineering solutions such as military training systems for the defense, civil, and health markets.
Why Could LDOS Be a Winner?
- Backlog has averaged 17.6% growth over the past two years, showing it has a pipeline of unfulfilled orders that will support revenue in the future
- Share repurchases over the last two years enabled its annual earnings per share growth of 22.4% to outpace its revenue gains
- Free cash flow margin increased by 5.1 percentage points over the last five years, giving the company more capital to invest or return to shareholders
Leidos is trading at $112.14 per share, or 9x forward P/E. Is now a good time to buy? Find out in our full research report, it’s free.
High-Quality Stocks for All Market Conditions
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.
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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-micro-cap company Tecnoglass (+1,552% between June 2020 and June 2025). Find your next big winner with StockStory today.
