Industrials businesses quietly power the physical things we depend on, from cars and homes to e-commerce infrastructure. They are also bound to benefit from a friendlier regulatory environment with the Trump administration, and this excitement has led to a six-month gain of 22% for the sector - higher than the S&P 500’s 9.8% return.
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. On that note, here are three industrials stocks we’re swiping left on.
nLIGHT (LASR)
Market Cap: $2.23 billion
Founded by a former CEO and Harvard-educated entrepreneur Scott Keeneyn, nLIGHT (NASDAQ:LASR) offers semiconductor and fiber lasers to the industrial, aerospace & defense, and medical sectors.
Why Should You Dump LASR?
- Annual revenue growth of 2.6% over the last five years was below our standards for the industrials sector
- Increased cash burn over the last five years raises questions about the return timeline for its investments
- Shrinking returns on capital from an already weak position reveal that neither previous nor ongoing investments are yielding the desired results
At $44.81 per share, nLIGHT trades at 170.4x forward P/E. Dive into our free research report to see why there are better opportunities than LASR.
Donaldson (DCI)
Market Cap: $12.37 billion
Playing a vital role in the historic Apollo 11 mission, Donaldson (NYSE:DCI) manufacturers and sells filtration equipment for various industries.
Why Are We Wary of DCI?
- 4.2% annual revenue growth over the last two years was slower than its industrials peers
- Absence of organic revenue growth over the past two years suggests it may have to lean into acquisitions to drive its expansion
- Projected sales growth of 3.8% for the next 12 months suggests sluggish demand
Donaldson’s stock price of $107.29 implies a valuation ratio of 3.1x forward price-to-sales. Check out our free in-depth research report to learn more about why DCI doesn’t pass our bar.
Worthington (WOR)
Market Cap: $2.85 billion
Founded by a steel salesman, Worthington (NYSE:WOR) specializes in steel processing, pressure cylinders, and engineered cabs for commercial markets.
Why Is WOR Risky?
- Customers postponed purchases of its products and services this cycle as its revenue declined by 14.9% annually over the last five years
- Earnings per share have dipped by 28.8% annually over the past two years, which is concerning because stock prices follow EPS over the long term
- Waning returns on capital from an already weak starting point displays the inefficacy of management’s past and current investment decisions
Worthington is trading at $57.64 per share, or 15.1x forward P/E. Read our free research report to see why you should think twice about including WOR in your portfolio.
Stocks We Like More
If your portfolio success hinges on just 4 stocks, your wealth is built on fragile ground. You have a small window to secure high-quality assets before the market widens and these prices disappear.
Don’t wait for the next volatility shock. Check out our Top 5 Growth Stocks for this month. 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.