Whether you see them or not, industrials businesses play a crucial part in our daily activities. Still, their generally high capital requirements expose them to the ups and downs of economic cycles, and the market seems to be baking in a prolonged downturn as the industry has shed 11.2% over the past six months. This drop was worse than the S&P 500’s 5.6% decline.

Investors should tread carefully as timing cyclical companies is a challenging task, and any misstep can have you catching a falling knife. With that said, here are three industrials stocks best left ignored.

Array (ARRY)

Market Cap: $806.8 million

Going public in October 2020, Array (NASDAQ:ARRY) is a global manufacturer of ground-mounting tracking systems for utility and distributed generation solar energy projects.

Why Are We Out on ARRY?

1. Declining unit sales over the past two years suggest it might have to lower prices to accelerate growth
2. Cash-burning history makes us doubt the long-term viability of its business model
3. Shrinking returns on capital from an already weak position reveal that neither previous nor ongoing investments are yielding the desired results

Array’s stock price of $5.29 implies a valuation ratio of 6.8x forward price-to-earnings. Check out our free in-depth research report to learn more about why ARRY doesn’t pass our bar.

The Toro Company (TTC)

Market Cap: $6.86 billion

Ceasing all production to support the war effort during World War II, Toro (NYSE:TTC) offers outdoor equipment for residential, commercial, and agricultural use.

Why Do We Think TTC Will Underperform?

1. Customers postponed purchases of its products and services this cycle as its revenue declined by 1.6% annually over the last two years
2. Capital intensity has ramped up over the last five years as its free cash flow margin decreased by 5.5 percentage points
3. Diminishing returns on capital suggest its earlier profit pools are drying up

At $68.51 per share, The Toro Company trades at 15.4x forward price-to-earnings. If you’re considering TTC for your portfolio, see our FREE research report to learn more.

Emerson Electric (EMR)

Market Cap: $58.93 billion

Founded in 1890, Emerson Electric (NYSE:EMR) is a multinational technology and engineering company providing solutions in the industrial, commercial, and residential markets.

Why Is EMR Not Exciting?

1. Products and services are facing end-market challenges during this cycle, as seen in its flat sales over the last five years
2. Estimated sales growth of 4.7% for the next 12 months implies demand will slow from its two-year trend
3. Waning returns on capital imply its previous profit engines are losing steam

Emerson Electric is trading at $104.45 per share, or 17.3x forward price-to-earnings. Read our free research report to see why you should think twice about including EMR in your portfolio, it’s free.

Stocks We Like More

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.

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Stocks that made our list in 2019 include now familiar names such as Nvidia (+2,183% between December 2019 and December 2024) as well as under-the-radar businesses like Comfort Systems (+751% five-year return). Find your next big winner with StockStory today for free.