Whether you see them or not, industrials businesses play a crucial part in our daily activities. But this role also comes with a demand profile tethered to the ebbs and flows of the broader economy. Thankfully, industrial end markets were stable over the past six months as the industry’s 9.7% gain has nearly mirrored 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. On that note, here are three industrials stocks we’re passing on.
Bel Fuse (BELFA)
Market Cap: $1.77 billion
Founded by 26-year-old Elliot Bernstein during the electronics boom after WW2, Bel Fuse (NASDAQ: BELF.A) provides electronic systems and devices to the telecommunications, networking, transportation, and industrial sectors.
Why Are We Hesitant About BELFA?
- Customers postponed purchases of its products and services this cycle as its revenue declined by 1.5% annually over the last two years
- Falling earnings per share over the last two years has some investors worried as stock prices ultimately follow EPS over the long term
Bel Fuse is trading at $119.51 per share, or 18.6x forward P/E. Dive into our free research report to see why there are better opportunities than BELFA.
ArcBest (ARCB)
Market Cap: $1.41 billion
Historically owning furniture, banking, and other subsidiaries, ArcBest (NASDAQ: ARCB) offers full-truckload, less-than-truckload, and intermodal deliveries of freight.
Why Do We Steer Clear of ARCB?
- Flat unit sales over the past two years indicate demand is soft and that the company may need to revise its strategy
- Earnings per share decreased by more than its revenue over the last two years, showing each sale was less profitable
- Diminishing returns on capital suggest its earlier profit pools are drying up
ArcBest’s stock price of $62.75 implies a valuation ratio of 15.8x forward P/E. Check out our free in-depth research report to learn more about why ARCB doesn’t pass our bar.
Stratasys (SSYS)
Market Cap: $723.3 million
Born from the Founder’s idea of making a toy frog with a glue gun, Stratasys (NASDAQ: SSYS) offers 3D printers and related materials, software, and services to many industries.
Why Do We Pass on SSYS?
- Sales tumbled by 5.6% annually over the last two years, showing market trends are working against its favor during this cycle
- Suboptimal cost structure is highlighted by its history of operating margin losses
- Capital intensity has ramped up over the last five years as its free cash flow margin decreased by 6.1 percentage points
At $8.51 per share, Stratasys trades at 35.7x forward P/E. If you’re considering SSYS for your portfolio, see our FREE research report to learn more.
Stocks We Like More
The market’s up big this year - but there’s a catch. Just 4 stocks account for half the S&P 500’s entire gain. That kind of concentration makes investors nervous, and for good reason. While everyone piles into the same crowded names, smart investors are hunting quality where no one’s looking - and paying a fraction of the price. Check out the high-quality names we’ve flagged in our Top 6 Stocks for this week. This is a curated list of our High Quality stocks that have generated a market-beating return of 244% over the last five years (as of June 30, 2025).
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-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
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