1 Industrials Stock with Competitive Advantages and 2 to Ignore

Yahoo

a day ago

Whether you see them or not, industrials businesses play a crucial part in our daily activities. Unfortunately, this role also comes with a demand profile tethered to the ebbs and flows of the broader economy, and investors seem to be forecasting a downturn - over the past six months, the industry has pulled back by 9.4%. This drop was worse than the S&P 500's 2.4% decline.
The elite companies can churn out earnings growth under any circumstance, however, and our mission at StockStory is to help you find them. Keeping that in mind, here is one industrials stock boasting a durable advantage and two that may face trouble.
Market Cap: $12.04 billion
Established in 1980, Clean Harbors (NYSE:CLH) provides environmental and industrial services like hazardous and non-hazardous waste disposal and emergency spill cleanups.
Why Are We Hesitant About CLH?
Absence of organic revenue growth over the past two years suggests it may have to lean into acquisitions to drive its expansion
Earnings per share have contracted by 2.5% annually over the last two years, a headwind for returns as stock prices often echo long-term EPS performance
Capital intensity has ramped up over the last five years as its free cash flow margin decreased by 5.3 percentage points
Clean Harbors is trading at $224.73 per share, or 28.3x forward P/E. Read our free research report to see why you should think twice about including CLH in your portfolio, it's free.
Market Cap: $939.8 million
Powering forklifts for Walmart's distribution centers, Plug Power (NASDAQ:PLUG) provides hydrogen fuel cells used to power electric motors.
Why Is PLUG Risky?
Annual sales declines of 8.7% for the past two years show its products and services struggled to connect with the market during this cycle
Free cash flow margin dropped by 531.2 percentage points over the last five years, implying the company became more capital intensive as competition picked up
Short cash runway increases the probability of a capital raise that dilutes existing shareholders
Plug Power's stock price of $0.88 implies a valuation ratio of 1x forward price-to-sales. Dive into our free research report to see why there are better opportunities than PLUG.
Market Cap: $16.92 billion
Formed from a merger of 12 companies, Curtiss-Wright (NYSE:CW) provides a range of products and services to the aerospace, industrial, electronic, and maritime industries.
Why Is CW on Our Radar?
Market share has increased this cycle as its 10.6% annual revenue growth over the last two years was exceptional
Operating profits and efficiency rose over the last five years as it benefited from some fixed cost leverage
Share buybacks catapulted its annual earnings per share growth to 18.2%, which outperformed its revenue gains over the last two years
At $448.96 per share, Curtiss-Wright trades at 35.8x forward P/E. Is now the time to initiate a position? See for yourself in our comprehensive research report, it's free.
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