1 Industrials Stock to Consider Right Now and 2 Facing Headwinds

1 Industrials Stock to Consider Right Now and 2 Facing Headwinds

Jabin Bastian

Mon, February 16, 2026 at 1:34 PM GMT+9 3 min read

In this article:

DE

+0.80%

VRRM

-0.16%

PRLB

+1.61%

^GSPC

+0.05%

Even if they go mostly unnoticed, industrial businesses are the backbone of our country. Their momentum is also rising as lower interest rates have incentivized higher capital spending. As a result, the industry has posted a 21.9% gain over the past six months, beating the S&P 500 by 16 percentage points.

Although these companies have produced results lately, a cautious approach is imperative. When the cycle naturally turns, the losers can be left for dead while the winners consolidate and take more of the market. With that said, here is one industrials stock poised to generate sustainable market-beating returns and two we’re steering clear of.

Two Industrials Stocks to Sell:

Deere (DE)

Market Cap: $163.4 billion

Revolutionizing agriculture with the first self-polishing cast-steel plow in the 1800s, Deere (NYSE:DE) manufactures and distributes advanced agricultural, construction, forestry, and turf care equipment.

Why Should You Dump DE?

Sales tumbled by 13.6% annually over the last two years, showing market trends are working against its favor during this cycle

Waning returns on capital imply its previous profit engines are losing steam

High net-debt-to-EBITDA ratio of 7× could force the company to raise capital at unfavorable terms if market conditions deteriorate

Deere is trading at $602.46 per share, or 35.9x forward P/E. Check out our free in-depth research report to learn more about why DE doesn’t pass our bar.

Proto Labs (PRLB)

Market Cap: $1.60 billion

Pioneering the concept of online quoting and manufacturing for custom prototypes and low-volume production parts, Proto Labs (NYSE:PRLB) offers injection molding, 3D printing, and sheet metal fabrication for manufacturers in various industries.

Why Are We Out on PRLB?

Sales trends were unexciting over the last two years as its 2.9% annual growth was below the typical industrials company

Falling earnings per share over the last five years has some investors worried as stock prices ultimately follow EPS over the long term

Below-average returns on capital indicate management struggled to find compelling investment opportunities

At $67.52 per share, Proto Labs trades at 37x forward P/E. To fully understand why you should be careful with PRLB, check out our full research report (it’s free).

One Industrials Stock to Watch:

Verra Mobility (VRRM)

Market Cap: $2.93 billion

Aiming to wrap technology and data around a historically manual and paper-based industry, Verra Mobility (NYSE:VRRM) is a leading provider of smart mobility technology to address tolls and violations, title and registration services, as well as safety and traffic enforcement.

Story Continues  

Why Could VRRM Be a Winner?

Market share has increased this cycle as its 18.4% annual revenue growth over the last five years was exceptional

Offerings are mission-critical for businesses and lead to a best-in-class gross margin of 61.8%

Earnings per share grew by 20.4% annually over the last five years, massively outpacing its peers

Verra Mobility’s stock price of $18.37 implies a valuation ratio of 13.8x forward P/E. Is now the right time to buy? Find out in our full research report, it’s free.

Stocks We Like Even 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 Growth Stocks for this month. 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 Kadant (+351% five-year return). Find your next big winner with StockStory today.

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