Even if they go mostly unnoticed, industrial businesses are the backbone of our country. Sure, they are at the whim of macroeconomic factors that influence capital spending (like interest rates), but the industry has held its ground over the past six months as its 5.2% return was almost identical to the S&P 500.

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. Taking that into account, here is one industrials stock boasting a durable advantage and two we’re steering clear of.

Market Cap: $10.46 billion

Based in Pittsburgh, WESCO (NYSE:WCC) provides electrical, industrial, and communications products and augments them with services such as supply chain management.

Why Do We Think Twice About WCC?

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

Falling earnings per share over the last two years has some investors worried as stock prices ultimately follow EPS over the long term

Lacking free cash flow generation means it has few chances to reinvest for growth, repurchase shares, or distribute capital

WESCO is trading at $214.43 per share, or 15.1x forward P/E. Read our free research report to see why you should think twice about including WCC in your portfolio, it’s free.

Market Cap: $84.17 billion

Founded in 1890, Emerson Electric (NYSE:EMR) is a multinational technology and engineering company providing solutions in the industrial, commercial, and residential markets.

Why Are We Wary of EMR?

Sales stagnated over the last five years and signal the need for new growth strategies

Free cash flow margin dropped by 4.1 percentage points over the last five years, implying the company became more capital intensive as competition picked up

Waning returns on capital imply its previous profit engines are losing steam

At $149.63 per share, Emerson Electric trades at 24.2x forward P/E. If you’re considering EMR for your portfolio, see our FREE research report to learn more.

Market Cap: $4.20 billion

Having played a role in the construction of the Hoover Dam, Granite Construction (NYSE:GVA) is a provider of infrastructure solutions for roads, bridges, and other projects.

Why Do We Like GVA?

Annual revenue growth of 12.2% over the past two years was outstanding, reflecting market share gains this cycle

Earnings per share have massively outperformed its peers over the last two years, increasing by 60.9% annually

Returns on capital are increasing as management’s prior bets are starting to bear fruit

Granite Construction’s stock price of $95.94 implies a valuation ratio of 8.9x forward EV-to-EBITDA. Is now the right time to buy? Find out in our full research report, it’s free.

Trump’s April 2024 tariff bombshell triggered a massive market selloff, but stocks have since staged an impressive recovery, leaving those who panic sold on the sidelines.

Take advantage of the rebound by checking 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 183% over the last five years (as of March 31st 2025).

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