Industrials businesses quietly power the physical things we depend on, from cars and homes to e-commerce infrastructure. But this role also comes with a demand profile tethered to the ebbs and flows of the broader economy. Thankfully, industrial end markets were stable over the past six months as the industry’s 16.2% gain has nearly mirrored the S&P 500.
Nevertheless, investors must be mindful as the cycle can unexpectedly turn. When this inevitably happens, only the elite companies will survive and ultimately thrive. 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:
Teledyne (TDY)
Market Cap: $24.39 billion
Playing a role in mapping the ocean floor as we know it today, Teledyne (NYSE: TDY) offers digital imaging and instrumentation products for various industries.
Why Does TDY Worry Us?
- Organic sales performance over the past two years indicates the company may need to make strategic adjustments or rely on M&A to catalyze faster growth
- Demand will likely be soft over the next 12 months as Wall Street’s estimates imply tepid growth of 4.6%
- Below-average returns on capital indicate management struggled to find compelling investment opportunities
Teledyne’s stock price of $518.65 implies a valuation ratio of 22.3x forward P/E. To fully understand why you should be careful with TDY, check out our full research report (it’s free for active Edge members).
Lennar (LEN)
Market Cap: $31.42 billion
One of the largest homebuilders in America, Lennar (NYSE: LEN) is known for constructing affordable, move-up, and retirement homes across a range of markets and communities.
Why Are We Out on LEN?
- Sales pipeline suggests its future revenue growth won’t meet our standards as its backlog averaged 19.2% declines over the past two years
- Earnings per share fell by 15.2% annually over the last two years while its revenue grew, showing its incremental sales were much less profitable
- 11.9 percentage point decline in its free cash flow margin over the last five years reflects the company’s increased investments to defend its market position
At $124.05 per share, Lennar trades at 14.8x forward P/E. If you’re considering LEN for your portfolio, see our FREE research report to learn more.
One Industrials Stock to Watch:
SmartRent (SMRT)
Market Cap: $281.9 million
Founded by an employee at a real estate rental company, SmartRent (NYSE: SMRT) provides smart home devices and software for multifamily residential properties, single-family rental homes, and student housing communities.
Why Do We Watch SMRT?
- ARR trends over the past two years show it’s maintaining a steady flow of long-term contracts that contribute positively to its revenue predictability
- Earnings per share have massively outperformed its peers over the last three years, increasing by 24.1% annually
- Returns on capital are increasing as management’s prior bets are starting to bear fruit
SmartRent is trading at $1.50 per share, or 147.1x forward EV-to-EBITDA. Is now a good time to buy? See for yourself in our comprehensive research report, it’s free for active Edge members .
High-Quality Stocks for All Market Conditions
The market’s up big this year - but there’s a catch. Just 4 stocks account for half the S&P 500’s entire gain. That kind of concentration makes investors nervous, and for good reason. While everyone piles into the same crowded names, smart investors are hunting quality where no one’s looking - and paying a fraction of the price. Check out the high-quality names we’ve flagged in our Top 6 Stocks for this week. This is a curated list of our High Quality stocks that have generated a market-beating return of 244% over the last five years (as of June 30, 2025).
Stocks that made our list in 2020 include now familiar names such as Nvidia (+1,545% between March 2020 and March 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 for free. Find your next big winner with StockStory today. Find your next big winner with StockStory today
StockStory is growing and hiring equity analyst and marketing roles. Are you a 0 to 1 builder passionate about the markets and AI? See the open roles here.
