3 Industrials Stocks That Concern Us

Industrials businesses quietly power the physical things we depend on, from cars and homes to e-commerce infrastructure. Their momentum is also rising as lower interest rates have incentivized higher capital spending. As a result, the industry has posted a 16.5% gain over the past six months, beating the S&P 500 by 2.4 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. On that note, here are three industrials stocks that may face trouble.

Thermon (THR)

Market Cap: $1.28 billion

Creating the first packaged tracing systems, Thermon (NYSE:THR) is a leading provider of engineered industrial process heating solutions for process industries.

Why Are We Cautious About THR?

1. 3.5% annual revenue growth over the last two years was slower than its industrials peers
2. Projected sales growth of 4% for the next 12 months suggests sluggish demand
3. Earnings growth underperformed the sector average over the last two years as its EPS grew by just 5.6% annually

At $39.14 per share, Thermon trades at 18.4x forward P/E. If you’re considering THR for your portfolio, see our FREE research report to learn more.

GXO Logistics (GXO)

Market Cap: $6.02 billion

With notable customers such as Nike and Apple, GXO (NYSE:GXO) manages outsourced supply chains and warehousing for various companies.

Why Is GXO Not Exciting?

1. Core business is underperforming as its organic revenue has disappointed over the past two years, suggesting it might need acquisitions to stimulate growth
2. Earnings per share have dipped by 1.1% annually over the past two years, which is concerning because stock prices follow EPS over the long term
3. High net-debt-to-EBITDA ratio of 6× could force the company to raise capital at unfavorable terms if market conditions deteriorate

GXO Logistics is trading at $53.01 per share, or 17.6x forward P/E. Read our free research report to see why you should think twice about including GXO in your portfolio.

Keysight (KEYS)

Market Cap: $36.04 billion

Spun off from Hewlett-Packard in 2014, Keysight (NYSE:KEYS) offers electronic measurement products for use in various sectors.

Why Does KEYS Give Us Pause?

1. New orders were hard to come by as its average backlog growth of 1.1% over the past two years underwhelmed
2. Sales over the last two years were less profitable as its earnings per share fell by 7.3% annually while its revenue was flat
3. Shrinking returns on capital suggest that increasing competition is eating into the company’s profitability

Keysight’s stock price of $210.49 implies a valuation ratio of 25.9x forward P/E. To fully understand why you should be careful with KEYS, check out our full research report (it’s free for active Edge members).

Stocks We Like 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 Growth Stocks for this month. 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-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

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