1 Industrials Stock on Our Watchlist and 2 We Ignore

Whether you see them or not, industrials businesses play a crucial part in our daily activities. Their momentum is also rising as lower interest rates have incentivized higher capital spending. As a result, the industry has posted a 16.7% gain over the past six months, beating the S&P 500 by 8.1 percentage points.

Nevertheless, investors must be mindful as the cycle can unexpectedly turn. When this inevitably happens, only the elite companies will survive and ultimately thrive. Taking that into account, here is one industrials stock poised to generate sustainable market-beating returns and two we’re steering clear of.

Two Industrials Stocks to Sell:

Avis Budget Group (CAR)

Market Cap: $5.47 billion

The parent company of brands such as Zipcar and Budget Truck Rental, Avis (NASDAQ:CAR) is a provider of car rental and mobility solutions.

Why Do We Pass on CAR?

1. Demand for its offerings was relatively low as its number of available rental days - car rental has underwhelmed
2. Shrinking returns on capital suggest that increasing competition is eating into the company’s profitability
3. Unfavorable liquidity position could lead to additional equity financing that dilutes shareholders

At $154.56 per share, Avis Budget Group trades at 11.2x forward P/E. Read our free research report to see why you should think twice about including CAR in your portfolio.

Installed Building Products (IBP)

Market Cap: $7.42 billion

Founded in 1977, Installed Building Products (NYSE:IBP) is a company specializing in the installation of insulation, waterproofing, and other complementary building products for residential and commercial construction.

Why Are We Hesitant About IBP?

1. Sales trends were unexciting over the last two years as its 3.5% annual growth was below the typical industrials company
2. Estimated sales decline of 3.1% for the next 12 months implies a challenging demand environment
3. Earnings per share lagged its peers over the last two years as they only grew by 5.3% annually

Installed Building Products’s stock price of $273.08 implies a valuation ratio of 27.3x forward P/E. To fully understand why you should be careful with IBP, check out our full research report (it’s free).

One Industrials Stock to Watch:

Dycom (DY)

Market Cap: $7.45 billion

Working alongside some of the most popular mobile carriers in the world, Dycom (NYSE:DY) builds and maintains telecommunications infrastructure.

Why Could DY Be a Winner?

1. Annual revenue growth of 11.1% over the last two years was superb and indicates its market share increased during this cycle
2. Operating margin expanded by 5.1 percentage points over the last five years as it scaled and became more efficient
3. Share repurchases over the last two years enabled its annual earnings per share growth of 18% to outpace its revenue gains

Dycom is trading at $257.42 per share, or 25.4x forward P/E. Is now the right time to buy? Find out in our full research report, it’s free.

High-Quality Stocks for All Market Conditions

Trump’s April 2025 tariff bombshell triggered a massive market selloff, but stocks have since staged an impressive recovery, leaving those who panic sold on the sidelines.

Take advantage of the rebound by checking out our Top 9 Market-Beating Stocks. This is a curated list of our High Quality stocks that have generated a market-beating return of 183% over the last five years (as of March 31st 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-micro-cap company Tecnoglass (+1,754% 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.