3 Overrated Industrials Stocks We Think Twice About

3 Overrated Industrials Stocks We Think Twice About

Adam Hejl

Mon, February 16, 2026 at 1:46 PM GMT+9 3 min read

In this article:

NSC

+0.13%

GTES

+1.60%

ESAB

+0.68%

Each stock in this article is trading near its 52-week high. These elevated prices usually indicate some degree of investor confidence, business improvements, or favorable market conditions.

However, not all companies with momentum are long-term winners, and many investors have lost money by following short-term trends. On that note, here are three stocks getting more buzz than they deserve and some you should buy instead.

ESAB (ESAB)

One-Month Return: +11%

Having played a significant role in the construction of the iconic Sydney Opera House, ESAB (NYSE:ESAB) manufactures and sells welding and cutting equipment for numerous industries.

Why Does ESAB Worry Us?

Sales were flat over the last two years, indicating it’s failed to expand this cycle

Core business is underperforming as its organic revenue has disappointed over the past two years, suggesting it might need acquisitions to stimulate growth

Capital intensity has ramped up over the last five years as its free cash flow margin decreased by 3.2 percentage points

ESAB is trading at $134.94 per share, or 23.6x forward P/E. If you’re considering ESAB for your portfolio, see our FREE research report to learn more.

Norfolk Southern (NSC)

One-Month Return: +8.4%

Starting with a single route from Virginia to North Carolina, Norfolk Southern (NYSE:NSC) is a freight transportation company operating a major railroad network across the eastern United States.

Why Do We Steer Clear of NSC?

Sales stagnated over the last two years and signal the need for new growth strategies

Day-to-day expenses have swelled relative to revenue over the last five years as its operating margin fell by 4.1 percentage points

Free cash flow margin dropped by 8.4 percentage points over the last five years, implying the company became more capital intensive as competition picked up

Norfolk Southern’s stock price of $315.07 implies a valuation ratio of 26x forward P/E. Read our free research report to see why you should think twice about including NSC in your portfolio, it’s free.

Gates Industrial Corporation (GTES)

One-Month Return: +22.2%

Helping create one of the most memorable moments for the iconic “Jurassic Park” film, Gates (NYSE:GTES) offers power transmission and fluid transfer equipment for various industries.

Why Does GTES Fall Short?

Absence of organic revenue growth over the past two years suggests it may have to lean into acquisitions to drive its expansion

Anticipated sales growth of 3.9% for the next year implies demand will be shaky

Low returns on capital reflect management’s struggle to allocate funds effectively

 






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At $27.80 per share, Gates Industrial Corporation trades at 17.1x forward P/E. To fully understand why you should be careful with GTES, check out our full research report (it’s free).

High-Quality Stocks for All Market Conditions

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 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-micro-cap company Tecnoglass (+1,754% five-year return). Find your next big winner with StockStory today.

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