2 Industrials Stocks with Solid Fundamentals and 1 Facing Challenges

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 36% for the sector - higher than the S&P 500’s 22.9% return.

Nevertheless, investors must be mindful as the cycle can unexpectedly turn. When this inevitably happens, only the elite companies will survive and ultimately thrive. On that note, here are two industrials stocks boasting durable advantages and one best left ignored.

One Industrials Stock to Sell:

XPO (XPO)

Market Cap: $14.77 billion

Owning a mobile game simulating freight operations for the Tour de France, XPO (NYSE:XPO) is a transportation company specializing in expedited shipping services.

Why Do We Steer Clear of XPO?

1. Products and services are facing significant end-market challenges during this cycle as sales have declined by 6.5% annually over the last five years
2. Earnings per share were flat over the last two years and fell short of the peer group average
3. 7.2 percentage point decline in its free cash flow margin over the last five years reflects the company’s increased investments to defend its market position

XPO is trading at $125.45 per share, or 30.5x forward P/E. Read our free research report to see why you should think twice about including XPO in your portfolio.

Two Industrials Stocks to Watch:

DXP (DXPE)

Market Cap: $1.84 billion

Founded during the emergence of Big Oil in Texas, DXP (NASDAQ:DXPE) provides pumps, valves, and other industrial components.

Why Does DXPE Stand Out?

1. Annual revenue growth of 10.4% over the last five years beat the sector average and underscores the unique value of its offerings
2. Operating margin expanded by 5.2 percentage points over the last five years as it scaled and became more efficient
3. Share buybacks catapulted its annual earnings per share growth to 32.6%, which outperformed its revenue gains over the last two years

At $117.82 per share, DXP trades at 17.9x forward P/E. Is now a good time to buy? See for yourself in our full research report, it’s free for active Edge members.

Waste Management (WM)

Market Cap: $87.06 billion

Headquartered in Houston, Waste Management (NYSE:WM) is a provider of comprehensive waste management services in North America.

Why Are We Fans of WM?

1. Annual revenue growth of 9.7% over the last five years beat the sector average and underscores the unique value of its offerings
2. Offerings are mission-critical for businesses and lead to a stellar gross margin of 38.6%
3. Excellent operating margin of 17.4% highlights the efficiency of its business model

Waste Management’s stock price of $216.51 implies a valuation ratio of 27.3x forward P/E. Is now the right time to buy? Find out in our full research report, it’s free for active Edge members.

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 5 Growth Stocks for this month. 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-small-cap company Exlservice (+354% 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.