1 Industrials Stock with Solid Fundamentals and 2 We Brush Off

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 20% gain over the past six months, beating the S&P 500 by 6.1 percentage points.

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. Keeping that in mind, here is one industrials stock boasting a durable advantage and two best left ignored.

Two Industrials Stocks to Sell:

Graham Corporation (GHM)

Market Cap: $709.1 million

Founded when its founder patented a unique design for a vacuum system used in the sugar refining process, Graham (NYSE:GHM) provides vacuum and heat transfer equipment for the energy, petrochemical, refining, and chemical sectors.

Why Are We Hesitant About GHM?

1. Responsiveness to unforeseen market trends is restricted due to its substandard operating margin profitability
2. ROIC of 3.1% reflects management’s challenges in identifying attractive investment opportunities
3. Depletion of cash reserves could lead to a fundraising event that triggers shareholder dilution

Graham Corporation’s stock price of $64.12 implies a valuation ratio of 43.8x forward P/E. If you’re considering GHM for your portfolio, see our FREE research report to learn more.

SolarEdge (SEDG)

Market Cap: $1.91 billion

Established in 2006, SolarEdge (NASDAQ: SEDG) creates advanced systems to improve the efficiency of solar panels.

Why Do We Steer Clear of SEDG?

1. Number of megawatts shipped has disappointed over the past two years, indicating weak demand for its offerings
2. Eroding returns on capital from an already low base indicate that management’s recent investments are destroying value
3. Negative EBITDA restricts its access to capital and increases the probability of shareholder dilution if things turn unexpectedly

At $32.17 per share, SolarEdge trades at 1.4x forward price-to-sales. Check out our free in-depth research report to learn more about why SEDG doesn’t pass our bar.

One Industrials Stock to Watch:

Limbach (LMB)

Market Cap: $890.7 million

Established in 1901, Limbach (NASDAQ: LMB) provides integrated building systems solutions, including mechanical, electrical, and plumbing services.

Why Could LMB Be a Winner?

1. Operating margin increased by 6 percentage points over the last five years as it refined its cost structure
2. Incremental sales significantly boosted profitability as its annual earnings per share growth of 42.5% over the last two years outstripped its revenue performance
3. Free cash flow margin grew by 8 percentage points over the last five years, giving the company more chips to play with

Limbach is trading at $76.64 per share, or 18.1x forward P/E. Is now a good time to buy? Find out in our full research report, it’s free for active Edge members.

Stocks We Like Even More

If your portfolio success hinges on just 4 stocks, your wealth is built on fragile ground. You have a small window to secure high-quality assets before the market widens and these prices disappear.

Don’t wait for the next volatility shock. Check 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 244% over the last five years (as of June 30, 2025).

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