1 Industrials Stock for Long-Term Investors and 2 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 19.6% for the sector - higher than the S&P 500’s 15.3% return.

Regardless of these results, investors should tread carefully. The diversity of companies in this space means that not all are created equal or well-positioned for the inescapable downturn. Taking that into account, here is one industrials stock poised to generate sustainable market-beating returns and two we’re passing on.

Two Industrials Stocks to Sell:

FedEx (FDX)

Market Cap: $64.66 billion

Sporting one of the largest air cargo fleets in the world, FedEx (NYSE:FDX) is a global provider of parcel and cargo delivery services.

Why Do We Avoid FDX?

1. Products and services are facing end-market challenges during this cycle, as seen in its flat sales over the last two years
2. Poor free cash flow margin of 2.4% for the last five years limits its freedom to invest in growth initiatives, execute share buybacks, or pay dividends
3. Diminishing returns on capital from an already low starting point show that neither management’s prior nor current bets are going as planned

At $274.24 per share, FedEx trades at 14.4x forward P/E. To fully understand why you should be careful with FDX, check out our full research report (it’s free for active Edge members).

Vontier (VNT)

Market Cap: $5.23 billion

A spin-off of a spin-off, Vontier (NYSE:VNT) provides electronic products and systems to the transportation, automotive, and manufacturing sectors.

Why Is VNT Risky?

1. 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
2. Estimated sales for the next 12 months are flat and imply a softer demand environment
3. Shrinking returns on capital suggest that increasing competition is eating into the company’s profitability

Vontier is trading at $36.04 per share, or 10.8x forward P/E. Read our free research report to see why you should think twice about including VNT in your portfolio.

One Industrials Stock to Buy:

Powell (POWL)

Market Cap: $4.07 billion

Originally a metal-working shop supporting local petrochemical facilities, Powell (NYSE:POWL) has grown from a small Houston manufacturer to a global provider of electrical systems.

Why Are We Backing POWL?

1. Market share has increased this cycle as its 25.7% annual revenue growth over the last two years was exceptional
2. Incremental sales over the last two years have been highly profitable as its earnings per share increased by 86.5% annually, topping its revenue gains
3. Free cash flow margin increased by 21.1 percentage points over the last five years, giving the company more capital to invest or return to shareholders

Powell’s stock price of $339.98 implies a valuation ratio of 21.2x forward P/E. Is now the right time to buy? See for yourself in our in-depth research report, it’s free for active Edge members.

Stocks We Like Even More

The market’s up big this year - but there’s a catch. Just 4 stocks account for half the S&P 500’s entire gain. That kind of concentration makes investors nervous, and for good reason. While everyone piles into the same crowded names, smart investors are hunting quality where no one’s looking - and paying a fraction of the price. Check out the high-quality names we’ve flagged in 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 244% over the last five years (as of June 30, 2025).

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-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

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