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 industry’s six-month return of 6.9% has fallen short of the S&P 500’s 21.1% rise.
The elite companies can churn out earnings growth under any circumstance, however, and our mission at StockStory is to help you find them. With that said, here are two industrials stocks boasting durable advantages and one that may face trouble.
One Industrials Stock to Sell:
Heartland Express (HTLD)
Market Cap: $900.9 million
Founded by the son of a trucker, Heartland Express (NASDAQ:HTLD) offers full-truckload deliveries across the United States and Mexico.
Why Do We Pass on HTLD?
- Sales tumbled by 18.8% annually over the last two years, showing market trends are working against it during this cycle
- Free cash flow margin shrank by 14.5 percentage points over the last five years, suggesting the company is consuming more capital to stay competitive
- Waning returns on capital from an already weak starting point displays the inefficacy of management’s past and current investment decisions
Heartland Express’s stock price of $11.66 implies a valuation ratio of 47.4x forward P/E. To fully understand why you should be careful with HTLD, check out our full research report (it’s free).
Two Industrials Stocks to Watch:
Woodward (WWD)
Market Cap: $19.47 billion
Initially designing controls for water wheels in the early 1900s, Woodward (NASDAQ:WWD) designs, services, and manufactures energy control products and optimization solutions.
Why Is WWD a Good Business?
- Annual revenue growth of 13.7% over the last five years was superb and indicates its market share increased during this cycle
- Operating margin expanded by 6.7 percentage points over the last five years as it scaled and became more efficient
- Share repurchases over the last two years enabled its annual earnings per share growth of 22.5% to outpace its revenue gains
At $330.00 per share, Woodward trades at 31.8x forward P/E. Is now the time to initiate a position? Find out in our full research report, it’s free.
Moog (MOG.A)
Market Cap: $12.31 billion
Responsible for the flight control actuation system integrated in the B-2 stealth bomber, Moog (NYSE:MOG.A) provides precision motion control solutions used in aerospace and defense applications
Why Is MOG.A on Our Radar?
- Offerings and unique value proposition resonate with customers, as seen in its above-market 10.1% annual sales growth over the last two years
- Performance over the past two years was turbocharged by share buybacks, which enabled its earnings per share to grow faster than its revenue
- Free cash flow margin increased by 4.8 percentage points over the last five years, giving the company more capital to invest or return to shareholders
Moog is trading at $387.67 per share, or 33.7x forward P/E. Is now the right time to buy? See for yourself in our in-depth research report, it’s free.
High-Quality Stocks for All Market Conditions
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