Even if they go mostly unnoticed, industrial businesses are the backbone of our country. 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 7.6% over the past six months. This drawdown was worse than the S&P 500’s 1.8% fall.

The elite companies can churn out earnings growth under any circumstance, however, and our mission at StockStory is to help you find them. Taking that into account, here are two industrials stocks boasting durable advantages and one best left ignored.

One Industrials Stock to Sell:

Mercury Systems (MRCY)

Market Cap: $2.77 billion

Founded in 1981, Mercury Systems (NASDAQ:MRCY) specializes in providing processing subsystems and components for primarily defense applications.

Why Do We Steer Clear of MRCY?

1. Organic revenue growth fell short of our benchmarks over the past two years and implies it may need to improve its products, pricing, or go-to-market strategy

2. Issuance of new shares over the last five years caused its earnings per share to fall by 47.2% annually while its revenue grew

3. Shrinking returns on capital from an already weak position reveal that neither previous nor ongoing investments are yielding the desired results

Mercury Systems is trading at $46.90 per share, or 91.9x forward price-to-earnings. To fully understand why you should be careful with MRCY, check out our full research report (it’s free) .

Two Industrials Stocks to Watch:

Nextracker (NXT)

Market Cap: $6.46 billion

With its technology playing a key role in the massive 1.2 gigawatt Noor Abu Dabhi solar farm project, Nextracker (NASDAQ:NXT) is a provider of solar tracker systems that help solar panels follow the sun.

Why Is NXT a Good Business?

1. Average backlog growth of 56.1% over the past two years shows it has a steady sales pipeline that will drive future orders

2. Incremental sales over the last two years have been highly profitable as its earnings per share increased by 131% annually, topping its revenue gains

3. Free cash flow margin increased by 13.1 percentage points over the last five years, giving the company more capital to invest or return to shareholders

Nextracker’s stock price of $44.40 implies a valuation ratio of 13.8x forward price-to-earnings. Is now a good time to buy? Find out in our full research report, it’s free .

ITT (ITT)

Market Cap: $11.01 billion

Playing a crucial role in the development of the first transatlantic television transmission in 1956, ITT (NYSE:ITT) provides motion and fluid handling equipment for various industries