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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 12.6%. This drop was worse than the S&P 500’s 6.4% loss.

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

Two Industrials Stocks to Sell:

WESCO (WCC)

Market Cap: $7.31 billion

Based in Pittsburgh, WESCO (NYSE:WCC) provides electrical, industrial, and communications products and augments them with services such as supply chain management.

Why Are We Hesitant About WCC?

1. 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

2. Demand will likely be soft over the next 12 months as Wall Street’s estimates imply tepid growth of 2.3%

3. Earnings per share have contracted by 15.7% annually over the last two years, a headwind for returns as stock prices often echo long-term EPS performance

At $160 per share, WESCO trades at 10.5x forward price-to-earnings. If you’re considering WCC for your portfolio, see our FREE research report to learn more.

Cummins (CMI)

Market Cap: $38.45 billion

With more than half of the heavy-duty truck market using its engines at one point, Cummins (NYSE:CMI) offers engines and power systems.

Why Does CMI Fall Short?

1. Estimated sales decline of 2.7% for the next 12 months implies a challenging demand environment

2. Capital intensity has ramped up over the last five years as its free cash flow margin decreased by 10.3 percentage points

3. Shrinking returns on capital suggest that increasing competition is eating into the company’s profitability

Cummins is trading at $285.63 per share, or 12.1x forward price-to-earnings. Read our free research report to see why you should think twice about including CMI in your portfolio, it’s free.

One Industrials Stock to Watch:

Dycom (DY)

Market Cap: $4.45 billion

Working alongside some of the most popular mobile carriers in the world, Dycom (NYSE:DY) builds and maintains telecommunications infrastructure.

Why Are We Fans of DY?

1. Impressive 11.1% annual revenue growth over the last two years indicates it’s winning market share this cycle

2. Operating margin expanded by 5.1 percentage points over the last five years as it scaled and became more efficient

3. Performance over the past two years was turbocharged by share buybacks, which enabled its earnings per share to grow faster than its revenue