2 Industrials Stocks to Own for Decades and 1 to Approach with Caution
Even if they go mostly unnoticed, industrial businesses are the backbone of our country. Still, their generally high capital requirements expose them to the ups and downs of economic cycles, and the market seems to be baking in a prolonged downturn as the industry has shed 2.3% over the past six months. This drop was disappointing since the S&P 500 stood firm.
The elite companies can churn out earnings growth under any circumstance, however, and our mission at StockStory is to help you find them. On that note, here are two industrials stocks boasting durable advantages and one we're swiping left on.
Market Cap: $14.18 billion
Started in 1926 as an insulation contractor, APi (NYSE:APG) provides life safety solutions and specialty services for buildings and infrastructure.
Why Does APG Worry Us?
Organic revenue growth fell short of our benchmarks over the past two years and implies it may need to improve its products, pricing, or go-to-market strategy
Capital intensity has ramped up over the last five years as its free cash flow margin decreased by 3.9 percentage points
Underwhelming 3% return on capital reflects management's difficulties in finding profitable growth opportunities
At $51.54 per share, APi trades at 24.3x forward P/E. Check out our free in-depth research report to learn more about why APG doesn't pass our bar.
Market Cap: $69.97 billion
Inventing the first forged aluminum truck wheel, Howmet (NYSE:HWM) specializes in lightweight metals engineering and manufacturing multi-material components used in vehicles.
Why Should You Buy HWM?
Impressive 12.7% annual revenue growth over the last two years indicates it's winning market share this cycle
Share repurchases have amplified shareholder returns as its annual earnings per share growth of 40.5% exceeded its revenue gains over the last two years
Free cash flow margin grew by 12.6 percentage points over the last five years, giving the company more chips to play with
Howmet is trading at $173.73 per share, or 51.2x forward P/E. Is now a good time to buy? See for yourself in our comprehensive research report, it's free.
Market Cap: $7.36 billion
With a significant portion of its products made from recycled materials, AZEK (NYSE:AZEK) designs and manufactures goods for outdoor living spaces.
Why Are We Bullish on AZEK?
Existing business lines can expand without risky acquisitions as its organic revenue growth averaged 12.5% over the past two years
Share buybacks catapulted its annual earnings per share growth to 56.9%, which outperformed its revenue gains over the last two years
Free cash flow margin increased by 8.8 percentage points over the last five years, giving the company more capital to invest or return to shareholders
AZEK's stock price of $51.19 implies a valuation ratio of 33.5x forward P/E. Is now the time to initiate a position? Find out in our full research report, it's free.
The market surged in 2024 and reached record highs after Donald Trump's presidential victory in November, but questions about new economic policies are adding much uncertainty for 2025.
While the crowd speculates what might happen next, we're homing in on the companies that can succeed regardless of the political or macroeconomic environment. Put yourself in the driver's seat and build a durable portfolio by checking out 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 183% over the last five years (as of March 31st 2025).
Stocks that made our list in 2020 include now familiar names such as Nvidia (+1,545% between March 2020 and March 2025) as well as under-the-radar businesses like the once-small-cap company Comfort Systems (+782% 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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