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 20.5% for the sector - higher than the S&P 500’s 15.3% return.
Nevertheless, investors must be mindful as the cycle can unexpectedly turn. When this inevitably happens, only the elite companies will survive and ultimately thrive. On that note, here are three industrials stocks best left ignored.
General Motors (GM)
Market Cap: $68.92 billion
Founded in 1908 by William C. Durant, General Motors (NYSE:GM) offers a range of vehicles and automobiles through brands such as Chevrolet, Buick, GMC, and Cadillac.
Why Do We Think Twice About GM?
- Underwhelming unit sales over the past two years indicate demand is soft and that the company may need to revise its strategy
- Sales are projected to tank by 1.1% over the next 12 months as demand evaporates
- Gross margin of 12.2% is below its competitors, leaving less money to invest in areas like marketing and R&D
General Motors’s stock price of $73.50 implies a valuation ratio of 6.8x forward P/E. Check out our free in-depth research report to learn more about why GM doesn’t pass our bar.
KB Home (KBH)
Market Cap: $4.17 billion
The first homebuilder to be listed on the NYSE, KB Home (NYSE:KB) is a homebuilding company targeting the first-time home buyer and move-up buyer markets.
Why Is KBH Risky?
- Product roadmap and go-to-market strategy need to be reconsidered as its backlog has averaged 20.4% declines over the past two years
- Earnings per share have dipped by 3.9% annually over the past two years, which is concerning because stock prices follow EPS over the long term
- Eroding returns on capital suggest its historical profit centers are aging
KB Home is trading at $64.33 per share, or 11x forward P/E. Dive into our free research report to see why there are better opportunities than KBH.
Tri Pointe Homes (TPH)
Market Cap: $2.93 billion
Established in 2009 in California, Tri Pointe Homes (NYSE:TPH) is a United States homebuilder recognized for its innovative and sustainable approach to creating premium, life-enhancing homes.
Why Should You Dump TPH?
- Sales pipeline suggests its future revenue growth won’t meet our standards as its backlog averaged 11.2% declines over the past two years
- Sales are expected to decline once again over the next 12 months as it continues working through a challenging demand environment
- Earnings per share decreased by more than its revenue over the last two years, showing each sale was less profitable
At $34.12 per share, Tri Pointe Homes trades at 14.8x forward P/E. Read our free research report to see why you should think twice about including TPH in your portfolio.
Stocks We Like More
Your portfolio can’t afford to be based on yesterday’s story. The risk in a handful of heavily crowded stocks is rising daily.
The names generating the next wave of massive growth are right here in our Top 5 Strong Momentum 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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