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Industrials businesses quietly power the physical things we depend on, from cars and homes to e-commerce infrastructure. Unfortunately, this role also comes with a demand profile tethered to the ebbs and flows of the broader economy, and investors seem to be forecasting a downturn - over the past six months, the industry has pulled back by 1.8%. This drop was disappointing since the S&P 500 climbed 1.1%.

The elite companies can churn out earnings growth under any circumstance, however, and our mission at StockStory is to help you find them. Taking that into account, here is one resilient industrials stock at the top of our wish list and two we’re steering clear of.

Two Industrials Stocks to Sell:

Ducommun (DCO)

Market Cap: $859.3 million

California’s oldest company, Ducommun (NYSE:DCO) is a provider of engineering and manufacturing services for high-performance products primarily within the aerospace and defense industries.

Why Do We Pass on DCO?

1. Average backlog growth of 4.9% over the past two years was mediocre and suggests fewer customers signed long-term contracts

2. Issuance of new shares partly offset its revenue growth over the last two years as its earnings per share were flat

3. Underwhelming 4.6% return on capital reflects management’s difficulties in finding profitable growth opportunities

Ducommun’s stock price of $58.08 implies a valuation ratio of 14.8x forward price-to-earnings. Read our free research report to see why you should think twice about including DCO in your portfolio, it’s free.

Luxfer (LXFR)

Market Cap: $329.5 million

With its magnesium alloys used in the construction of the famous Spirit of St. Louis aircraft, Luxfer (NYSE:LXFR) offers specialized materials, components, and gas containment devices to various industries.

Why Do We Avoid LXFR?

1. Sales tumbled by 3.2% annually over the last one years, showing market trends are working against its favor during this cycle

2. Demand will likely be weak over the next 12 months as Wall Street expects flat revenue

3. Earnings per share have dipped by 4.1% annually over the past five years, which is concerning because stock prices follow EPS over the long term

Luxfer is trading at $12.32 per share, or 11.8x forward price-to-earnings. To fully understand why you should be careful with LXFR, check out our full research report (it’s free).

One Industrials Stock to Buy:

HEICO (HEI)

Market Cap: $31.1 billion

Founded in 1957, HEICO (NYSE:HEI) manufactures and services aerospace and electronic components for commercial aviation, defense, space, and other industries.

Why Should You Buy HEI?

1. Existing business lines can expand without risky acquisitions as its organic revenue growth averaged 9.6% over the past two years

2. Earnings growth has trumped its peers over the last two years as its EPS has compounded at 24.9% annually

3. Robust free cash flow margin of 17.8% gives it many options for capital deployment