3 Industrials Stocks That Fall Short

Industrials businesses quietly power the physical things we depend on, from cars and homes to e-commerce infrastructure. But their prominence also brings high exposure to the ups and downs of economic cycles. Luckily, the tide is turning in their favor as the industry’s 18.1% return over the past six months has topped the S&P 500 by 3.7 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 are three industrials stocks best left ignored.

Ingersoll Rand (IR)

Market Cap: $32.3 billion

Started with the invention of the steam drill, Ingersoll Rand (NYSE:IR) provides mission-critical air, gas, liquid, and solid flow creation solutions.

Why Are We Wary of IR?

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. Anticipated sales growth of 5.6% for the next year implies demand will be shaky
3. Low returns on capital reflect management’s struggle to allocate funds effectively

Ingersoll Rand is trading at $81.68 per share, or 23.9x forward P/E. To fully understand why you should be careful with IR, check out our full research report (it’s free for active Edge members).

General Dynamics (GD)

Market Cap: $91.03 billion

Creator of the famous M1 Abrahms tank, General Dynamics (NYSE:GD) develops aerospace, marine systems, combat systems, and information technology products.

Why Do We Think Twice About GD?

1. Backlog growth averaged a weak 3.4% over the past two years, suggesting it may need to tweak its product roadmap or go-to-market strategy
2. Estimated sales growth of 4.1% for the next 12 months implies demand will slow from its two-year trend
3. 1.8 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

At $339.57 per share, General Dynamics trades at 20.8x forward P/E. Read our free research report to see why you should think twice about including GD in your portfolio.

Icahn Enterprises (IEP)

Market Cap: $4.64 billion

Founded in 1987, Icahn Enterprises (NASDAQ: IEP) is a diversified holding company primarily engaged in investment and asset management across various sectors.

Why Does IEP Give Us Pause?

1. Annual sales declines of 9.6% for the past two years show its products and services struggled to connect with the market during this cycle
2. Eroding returns on capital from an already low base indicate that management’s recent investments are destroying value
3. 8× net-debt-to-EBITDA ratio shows it’s overleveraged and increases the probability of shareholder dilution if things turn unexpectedly

Icahn Enterprises’s stock price of $7.73 implies a valuation ratio of 0.5x forward price-to-sales. If you’re considering IEP for your portfolio, see our FREE research report to learn more.

Stocks We Like More

Your portfolio can’t afford to be based on yesterday’s story. The risk in a handful of heavily crowded stocks is rising daily.

The names generating the next wave of massive growth are right here in our Top 6 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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