Even if they go mostly unnoticed, industrial businesses are the backbone of our country. But they are at the whim of volatile macroeconomic factors that influence capital spending (like interest rates), and the market seems convinced that demand will slow. Due to this bearish outlook, the industry has tumbled by 2.3% over the past six months. This drawdown was disheartening since the S&P 500 held its ground.
Some companies can grow regardless of the economic backdrop, but the odds aren’t great for the ones we’re analyzing today. With that said, here are three industrials stocks we’re steering clear of.
Owens Corning (OC)
Market Cap: $11.21 billion
Credited with the discovery of fiberglass, Owens Corning (NYSE:OC) supplies building and construction materials to the United States and international markets.
Why Does OC Worry Us?
- 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
- Projected sales decline of 6.7% for the next 12 months points to a tough demand environment ahead
- 4.8 percentage point decline in its free cash flow margin over the last five years reflects the company’s increased investments to defend its market position
Owens Corning is trading at $133.43 per share, or 8.9x forward P/E. Check out our free in-depth research report to learn more about why OC doesn’t pass our bar.
Lucid (LCID)
Market Cap: $6.68 billion
Founded by a former Tesla Vice President, Lucid Group (NASDAQ:LCID) designs, manufactures, and sells luxury electric vehicles with long-range capabilities.
Why Do We Think Twice About LCID?
- Negative 161% gross margin means it loses money on every sale and must pivot or scale quickly to survive
- Cash burn makes us question whether it can achieve sustainable long-term growth
- Short cash runway increases the probability of a capital raise that dilutes existing shareholders
Lucid’s stock price of $2.20 implies a valuation ratio of 3.9x forward price-to-sales. If you’re considering LCID for your portfolio, see our FREE research report to learn more.
Genco (GNK)
Market Cap: $567.5 million
Headquartered in NYC, Genco (NYSE:GNK) is a shipping company that transports dry bulk cargo along worldwide maritime routes.
Why Do We Steer Clear of GNK?
- Performance surrounding its owned vessels has lagged its peers
- Earnings per share have contracted by 43.6% annually over the last two years, a headwind for returns as stock prices often echo long-term EPS performance
- Free cash flow margin dropped by 6.5 percentage points over the last five years, implying the company became more capital intensive as competition picked up
At $13.40 per share, Genco trades at 20.2x forward P/E. Dive into our free research report to see why there are better opportunities than GNK.
High-Quality Stocks for All Market Conditions
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 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).
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 Exlservice (+354% 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