3 Industrials Stocks Walking a Fine Line

Whether you see them or not, industrials businesses play a crucial part in our daily activities. Still, their generally high capital requirements expose them to the ups and downs of economic cycles, and the industry's six-month return of 3.1% has fallen short of the S&P 500's 16.8% rise.

Some companies can grow regardless of the economic backdrop, but the odds aren't great for the ones we're analyzing today. Keeping that in mind, here are three industrials stocks we would avoid.

Expanding its markets through acquisitions since its founding, Alamo (NYSE:ALG) designs, manufactures, and services vegetation management and infrastructure maintenance equipment for governmental, industrial, and agricultural use.

Flat sales over the last two years suggest it must find different ways to grow during this cycle

Estimated sales growth of 4.2% for the next 12 months is soft and implies weaker demand

Earnings per share have dipped by 5.6% annually over the past two years, which is concerning because stock prices follow EPS over the long term

Alamo is trading at $162.53 per share, or 14.5x forward P/E. Dive into our free research report to see why there are better opportunities than ALG.

Founded in 1990 when a group of engineers from five companies decided to merge, AECOM (NYSE:ACM) provides various infrastructure consulting services.

New orders were hard to come by as its backlog was flat over the past two years

Sales were less profitable over the last two years as its earnings per share fell by 6.3% annually, worse than its revenue declines

Free cash flow margin shrank by 3.5 percentage points over the last five years, suggesting the company is consuming more capital to stay competitive

At $60.30 per share, AECOM trades at 9.7x forward P/E. Read our free research report to see why you should think twice about including ACM in your portfolio, it's free.

With an iconic "STANLEY" logo which has remained virtually unchanged for over a century, Stanley Black & Decker (NYSE:SWK) is a manufacturer primarily catering to the tool and outdoor equipment industry.

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

Sales are projected to be flat over the next 12 months and imply weak demand

Falling earnings per share over the last five years has some investors worried as stock prices ultimately follow EPS over the long term

Stanley Black & Decker's stock price of $89.68 implies a valuation ratio of 15.7x forward P/E. To fully understand why you should be careful with SWK, check out our full research report (it's free).

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.

Find out which 5 stocks it's flagging this month — FREE. Get Our Top 5 Growth 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.