Even if they go mostly unnoticed, industrial businesses are the backbone of our country. 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 21.8% for the sector - higher than the S&P 500’s 16% 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. Taking that into account, here are three industrials stocks best left ignored.
Timken (TKR)
Market Cap: $5.30 billion
Established after the founder noticed the difficulty freight wagons had making sharp turns, Timken (NYSE:TKR) is a provider of industrial parts used across various sectors.
Why Should You Dump TKR?
- 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
- Estimated sales for the next 12 months are flat and imply a softer demand environment
- Earnings per share decreased by more than its revenue over the last two years, showing each sale was less profitable
Timken’s stock price of $76.14 implies a valuation ratio of 12.8x forward P/E. Check out our free in-depth research report to learn more about why TKR doesn’t pass our bar.
GATX (GATX)
Market Cap: $5.99 billion
Originally founded to ship beer, GATX (NYSE:GATX) provides leasing and management services for railcars and other transportation assets globally.
Why Are We Wary of GATX?
- Sluggish trends in its active railcars suggest customers aren’t adopting its solutions as quickly as the company hoped
- Cash burn makes us question whether it can achieve sustainable long-term growth
- Limited cash reserves may force the company to seek unfavorable financing terms that could dilute shareholders
At $168.08 per share, GATX trades at 18.3x forward P/E. If you’re considering GATX for your portfolio, see our FREE research report to learn more.
Vulcan Materials (VMC)
Market Cap: $38.64 billion
Founded in 1909, Vulcan Materials (NYSE:VMC) is a producer of construction aggregates, primarily crushed stone, sand, and gravel.
Why Does VMC Fall Short?
- Sales stagnated over the last two years and signal the need for new growth strategies
- Sluggish trends in its tons shipped suggest customers aren’t adopting its solutions as quickly as the company hoped
- Gross margin of 25% is below its competitors, leaving less money to invest in areas like marketing and R&D
Vulcan Materials is trading at $290.40 per share, or 32.9x forward P/E. Dive into our free research report to see why there are better opportunities than VMC.
Stocks We Like More
Donald Trump’s April 2025 "Liberation Day" tariffs sent markets into a tailspin, but stocks have since rebounded strongly, proving that knee-jerk reactions often create the best buying opportunities.
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