2 Industrials Stocks with Promising Prospects and 1 Facing Headwinds

Industrials businesses quietly power the physical things we depend on, from cars and homes to e-commerce infrastructure. 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 19.6% for the sector - higher than the S&P 500’s 10.9% 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. On that note, here are two industrials stocks we think can generate sustainable market-beating returns and one best left ignored.

One Industrials Stock to Sell:

Genco (GNK)

Market Cap: $1.05 billion

Headquartered in NYC, Genco (NYSE:GNK) is a shipping company that transports dry bulk cargo along worldwide maritime routes.

Why Do We Steer Clear of GNK?

1. Number of owned vessels has disappointed over the past two years, indicating weak demand for its offerings
2. Sales over the last two years were less profitable as its earnings per share fell by 32.6% annually while its revenue was flat
3. Free cash flow margin shrank by 97.3 percentage points over the last five years, suggesting the company is consuming more capital to stay competitive

Genco is trading at $24.17 per share, or 7.3x forward EV-to-EBITDA. If you’re considering GNK for your portfolio, see our FREE research report to learn more.

Two Industrials Stocks to Watch:

Xylem (XYL)

Market Cap: $26.22 billion

Formed through a spinoff, Xylem (NYSE:XYL) manufactures and services engineered products across a wide variety of applications primarily in the water sector.

Why Could XYL Be a Winner?

1. Market share has increased this cycle as its 12.7% annual revenue growth over the last five years was exceptional
2. Additional sales over the last five years increased its profitability as the 16.7% annual growth in its earnings per share outpaced its revenue
3. Free cash flow margin increased by 5.5 percentage points over the last five years, giving the company more capital to invest or return to shareholders

Xylem’s stock price of $110.40 implies a valuation ratio of 19.4x forward P/E. Is now the right time to buy? See for yourself in our full research report, it’s free.

American Superconductor (AMSC)

Market Cap: $2.44 billion

Founded in 1987, American Superconductor (NASDAQ:AMSC) has shifted from superconductor research to developing power systems, adapting to changing energy grid needs and naval technology requirements.

Why Are We Backing AMSC?

1. Market share has increased this cycle as its 43.3% annual revenue growth over the last two years was exceptional
2. Free cash flow margin expanded by 24.5 percentage points over the last five years, providing additional flexibility for investments and share buybacks/dividends
3. Improving returns on capital suggest its past investments are beginning to deliver value

At $51.16 per share, American Superconductor trades at 48.9x forward P/E. Is now a good time to buy? 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 Exlservice (+354% five-year return). Find your next big winner with StockStory today.