1 Industrials Stock with Impressive Fundamentals and 2 We Ignore

Even if they go mostly unnoticed, industrial businesses are the backbone of our country. 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 19.2% return over the past six months has topped the S&P 500 by 8.3 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. Keeping that in mind, here is one industrials stock boasting a durable advantage and two we’re passing on.

Two Industrials Stocks to Sell:

Stratasys (SSYS)

Market Cap: $781.3 million

Born from the Founder’s idea of making a toy frog with a glue gun, Stratasys (NASDAQ:SSYS) offers 3D printers and related materials, software, and services to many industries.

Why Does SSYS Worry Us?

1. Sales tumbled by 6.2% annually over the last two years, showing market trends are working against it during this cycle
2. Poor expense management has led to operating margin losses
3. Negative free cash flow raises questions about the return timeline for its investments

Stratasys’s stock price of $8.90 implies a valuation ratio of 66x forward P/E. Dive into our free research report to see why there are better opportunities than SSYS.

Meritage Homes (MTH)

Market Cap: $4.91 billion

Originally founded in 1985 in Arizona as Monterey Homes, Meritage Homes (NYSE:MTH) is a homebuilder specializing in designing and constructing energy-efficient and single-family homes in the US.

Why Should You Dump MTH?

1. Annual sales declines of 5.8% for the past two years show its products and services struggled to connect with the market during this cycle
2. Earnings per share have contracted by 2.2% annually over the last five years, a headwind for returns as stock prices often echo long-term EPS performance
3. Eroding returns on capital suggest its historical profit centers are aging

At $72.46 per share, Meritage Homes trades at 13.9x forward P/E. To fully understand why you should be careful with MTH, check out our full research report (it’s free).

One Industrials Stock to Buy:

Trane Technologies (TT)

Market Cap: $101.7 billion

With low-pressure heating systems as its first product, Trane (NYSE:TT) designs, manufactures, and sells HVAC and refrigeration systems, the former to commercial and residential building customers and the latter to commercial truck manufacturers.

Why Are We Backing TT?

1. Annual revenue growth of 11% over the last five years was superb and indicates its market share increased during this cycle
2. Performance over the past two years was turbocharged by share buybacks, which enabled its earnings per share to grow faster than its revenue
3. Free cash flow margin expanded by 8.4 percentage points over the last five years, providing additional flexibility for investments and share buybacks/dividends

Trane Technologies is trading at $475.35 per share, or 31x 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

ONE MORE THING: Top 6 Stocks for This Week. This market is separating quality stocks from expensive ones fast. AI is taking down whole sectors with no warning. In a rotation this fast, you need more than a list of good companies.

Our AI system flagged Palantir before it ran 1,662%. AppLovin before it ran 753%. Nvidia before it ran 1,178%. Each week it produces 6 new names that pass the same tests. Get Our Top 6 Stocks for Free HERE.

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-micro-cap company Kadant (+351% five-year return). Find your next big winner with StockStory today.