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 14.9% return over the past six months has topped the S&P 500 by 6.4 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. With that said, here is one industrials stock boasting a durable advantage and two we’re steering clear of.
Two Industrials Stocks to Sell:
SolarEdge (SEDG)
Market Cap: $3.55 billion
Established in 2006, SolarEdge (NASDAQ: SEDG) creates advanced systems to improve the efficiency of solar panels.
Why Is SEDG Risky?
- Products and services are facing significant end-market challenges during this cycle as sales have declined by 2.3% annually over the last five years
- Cash-burning tendencies make us wonder if it can sustainably generate shareholder value
- Waning returns on capital from an already weak starting point displays the inefficacy of management’s past and current investment decisions
SolarEdge’s stock price of $52.55 implies a valuation ratio of 94x forward P/E. If you’re considering SEDG for your portfolio, see our FREE research report to learn more.
Tesla (TSLA)
Market Cap: $1.50 trillion
Originally founded by Martin Eberhard and Marc Tarpenning in 2003, Tesla (NASDAQ: TSLA) is an electric vehicle company accelerating the world’s transition to sustainable energy.
Why Do We Pass on TSLA?
- Tesla’s scale advantage in EV production leads to gross margins that exceed incumbents such as General Motors and Ford. However, a softer macroeconomic backdrop and tariff pressures have weighed on automobile sales, which are highly cyclical.
- The company’s execution ability is a question mark given its long history of delays, such as the Cybertruck and Robotaxi launches. Its sizeable investments in projects with uncertain return timelines, like Optimus, also raise skepticism from investors.
- On the bright side, Tesla’s Megapack product solves a critical problem for utilities needing renewable energy storage solutions. This innovation has made the energy segment the most profitable and fastest-growing business line for the company.
Tesla is trading at $394.47 per share, or 197.5x forward price-to-earnings. To fully understand why you should be careful with TSLA, check out our full research report (it’s free).
One Industrials Stock to Buy:
JBT Marel (JBTM)
Market Cap: $6.41 billion
Tracing back to its invention of the mechanical milk bottle filler in 1884, JBT Marel (NYSE: JBTM) designs, manufactures, and sells equipment used for food processing and aviation.
Why Should You Buy JBTM?
- Annual revenue growth of 52.5% over the last two years was superb and indicates its market share increased during this cycle
- Healthy unit economics are reflected in its 35.1% gross margin and give it more money to invest in marketing and R&D
- Earnings per share have massively outperformed its peers over the last two years, increasing by 27.1% annually
At $145.84 per share, JBT Marel trades at 16.8x 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
ONE MORE THING: Top 5 Growth Stocks. The biggest stock winners almost always had one thing in common before they ran. Revenue growing like crazy. Meta. CrowdStrike. Broadcom. Our AI flagged all three. They returned 315%, 314%, and 455%, respectively.
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Stocks that made our list in 2020 include now familiar names such as Nvidia (+1,326% between June 2020 and June 2025) as well as under-the-radar businesses like the once-small-cap company Comfort Systems (+782% five-year return). Find your next big winner with StockStory today.
