3 Industrials Stocks That Fall Short

Whether you see them or not, industrials businesses play a crucial part in our daily activities. 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 17.7% for the sector - higher than the S&P 500’s 8.8% 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. Keeping that in mind, here are three industrials stocks best left ignored.

Novanta (NOVT)

Market Cap: $4.23 billion

Originally a pioneer in the laser scanning industry during the late 1960s, Novanta (NASDAQ:NOVT) offers medicine and manufacturing technology to the medical, life sciences, and manufacturing industries.

Why Does NOVT Worry Us?

1. Muted 3.7% annual revenue growth over the last two years shows its demand lagged behind its industrials peers
2. Flat earnings per share over the last two years underperformed the sector average
3. Free cash flow margin dropped by 8 percentage points over the last five years, implying the company became more capital intensive as competition picked up

Novanta’s stock price of $117.63 implies a valuation ratio of 33.5x forward EV-to-EBITDA. Read our free research report to see why you should think twice about including NOVT in your portfolio.

American Woodmark (AMWD)

Market Cap: $968.4 million

Starting as a small millwork shop, American Woodmark (NASDAQ:AMWD) is a cabinet manufacturing company that helps customers from inspiration to installation.

Why Do We Pass on AMWD?

1. Sales tumbled by 9.6% annually over the last two years, showing market trends are working against its favor during this cycle
2. Sales are projected to tank by 2.5% over the next 12 months as its demand continues evaporating
3. Earnings per share have contracted by 1.3% annually over the last five years, a headwind for returns as stock prices often echo long-term EPS performance

At $66.47 per share, American Woodmark trades at 13.5x forward P/E. If you’re considering AMWD for your portfolio, see our FREE research report to learn more.

NN (NNBR)

Market Cap: $128.3 million

Formerly known as Nuturn, NN (NASDAQ:NNBR) provides metal components, bearings, and plastic and rubber components to the automotive, aerospace, medical, and industrial sectors.

Why Do We Steer Clear of NNBR?

1. Customers postponed purchases of its products and services this cycle as its revenue declined by 6.6% annually over the last two years
2. Cash-burning history makes us doubt the long-term viability of its business model
3. Diminishing returns on capital from an already low starting point show that neither management’s prior nor current bets are going as planned

NN is trading at $2.55 per share, or 74.1x forward P/E. Check out our free in-depth research report to learn more about why NNBR doesn’t pass our bar.

Stocks We Like More

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 5 Strong Momentum Stocks for this week. 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 Kadant (+351% 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.