Whether you see them or not, industrials businesses play a crucial part in our daily activities. But their prominence also brings high exposure to the ups and downs of economic cycles. Luckily, the tide is turning in their favor as the industry’s 20.4% return over the past six months has topped the S&P 500 by 11.6 percentage points.
Although these companies have produced results lately, a cautious approach is imperative. When the cycle naturally turns, the losers can be left for dead while the winners consolidate and take more of the market. With that said, here is one industrials stock boasting a durable advantage and two we’re steering clear of.
Two Industrials Stocks to Sell:
Lucid (LCID)
Market Cap: $2.02 billion
Founded by a former Tesla Vice President, Lucid Group (NASDAQ: LCID) designs, manufactures, and sells luxury electric vehicles with long-range capabilities.
Why Are We Wary of LCID?
- Negative 136% gross margin means it loses money on every sale and must pivot or scale quickly to survive
- Cash-burning history makes us doubt the long-term viability of its business model
- Depletion of cash reserves could lead to a fundraising event that triggers shareholder dilution
Lucid is trading at $5.35 per share, or 0.7x forward price-to-sales. Check out our free in-depth research report to learn more about why LCID doesn’t pass our bar.
Martin Marietta Materials (MLM)
Market Cap: $33.96 billion
Operating one of North America's largest networks of quarries, including 14 underground mines, Martin Marietta Materials (NYSE: MLM) is a natural resource-based building materials company that supplies aggregates, cement, and other construction materials for infrastructure and building projects.
Why Does MLM Worry Us?
- Products and services are facing significant end-market challenges during this cycle as sales have declined by 2.5% annually over the last two years
- Earnings per share were flat over the last two years and fell short of the peer group average
- Below-average returns on capital indicate management struggled to find compelling investment opportunities
At $609.12 per share, Martin Marietta Materials trades at 30x forward P/E. Dive into our free research report to see why there are better opportunities than MLM.
One Industrials Stock to Buy:
Axon (AXON)
Market Cap: $35.96 billion
Providing body cameras and tasers for first responders, AXON (NASDAQ: AXON) develops technology solutions and weapons products for military, law enforcement, and civilians.
Why Is AXON a Good Business?
- Ability to secure long-term commitments with customers is evident in its 37.6% average ARR growth over the past two years
- Operating profits increased over the last five years as the company gained some leverage on its fixed costs and became more efficient
- Earnings growth has massively outpaced its peers over the last two years as its EPS has compounded at 26.6% annually
Axon’s stock price of $422.95 implies a valuation ratio of 50.6x forward P/E. Is now the right time to buy? Find out in our full research report, it’s free.
Stocks We Like Even More
ALSO WORTH WATCHING: Top 5 Momentum Stocks. The best time to own a great stock is when the market is finally noticing it. These aren’t just high-quality businesses. Something is happening with them right now. Elite fundamentals meet near-term momentum — both boxes checked at the same time.
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Stocks that made our list in 2020 include now familiar names such as Nvidia (+1,326% between June 2020 and June 2025) as well as under-the-radar businesses like the once-micro-cap company Tecnoglass (+1,754% five-year return). Find your next big winner with StockStory today.
