Whether you see them or not, industrials businesses play a crucial part in our daily activities. Unfortunately, this role also comes with a demand profile tethered to the ebbs and flows of the broader economy, and the industry is currently lagging as its six-month return of 2.1% has trailed the S&P 500’s 13% gain.
Only some companies are subject to these dynamics, however, and a handful of high-quality businesses can deliver earnings growth in any environment. On that note, here is one industrials stock poised to generate sustainable market-beating returns and two we would avoid.
Two Industrials Stocks to Sell:
Lucid (LCID)
Market Cap: $2.58 billion
Founded by a former Tesla Vice President, Lucid Group (NASDAQ: LCID) designs, manufactures, and sells luxury electric vehicles with long-range capabilities.
Why Are We Hesitant About LCID?
- Negative 133% gross margin means it loses money on every sale and must pivot or scale quickly to survive
- Negative free cash flow raises questions about the return timeline for its investments
- Short cash runway increases the probability of a capital raise that dilutes existing shareholders
Lucid’s stock price of $6.53 implies a valuation ratio of 1x forward price-to-sales. Read our free research report to see why you should think twice about including LCID in your portfolio.
EVgo (EVGO)
Market Cap: $223.9 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 Is EVGO Not Exciting?
- Poor expense management has led to operating margin losses
- Cash-burning tendencies make us wonder if it can sustainably generate shareholder value
- Unfavorable liquidity position could lead to additional equity financing that dilutes shareholders
EVgo is trading at $1.59 per share, or 15x forward EV-to-EBITDA. To fully understand why you should be careful with EVGO, check out our full research report (it’s free).
One Industrials Stock to Buy:
Karat Packaging (KRT)
Market Cap: $961.9 million
Founded as Lollicup, Karat Packaging (NASDAQ: KRT) distributes and manufactures environmentally-friendly disposable foodservice packaging solutions.
Why Do We Love KRT?
- Offerings and unique value proposition resonate with customers, as seen in its above-market 9.8% annual sales growth over the last two years
- Incremental sales over the last two years have been highly profitable as its earnings per share increased by 25.7% annually, topping its revenue gains
- Free cash flow margin expanded by 13.8 percentage points over the last five years, providing additional flexibility for investments and share buybacks/dividends
Karat Packaging’s stock price of $48.24 implies a valuation ratio of 26.5x forward P/E. Is now the time to initiate a position? Find out in our full research report, it’s free.
Stocks We Like Even More
ALSO WORTH WATCHING: Top 5 Momentum Stocks. The best time to own a great stock is when the market is finally noticing it. These aren’t just high-quality businesses. Something is happening with them right now. Elite fundamentals meet near-term momentum — both boxes checked at the same time.
Find out which stocks our AI platform is flagging this week. See this week’s Strong Momentum stocks — FREE. Get Our Strong Momentum 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-micro-cap company Kadant (+214% between June 2020 and June 2025). Find your next big winner with StockStory today.
