Even if they go mostly unnoticed, industrial businesses are the backbone of our country. But they are at the whim of volatile macroeconomic factors that influence capital spending (like interest rates), and the market seems convinced that demand will slow. Due to this bearish outlook, the industry has tumbled by 16.4% over the past six months. This performance was worse than the S&P 500’s 8.7% fall.

Despite the lackluster result, a few diamonds in the rough can produce earnings growth no matter what, and we started StockStory to help you find them. Taking that into account, here is one resilient industrials stock at the top of our wish list and two we’re swiping left on.

Two Industrials Stocks to Sell:

Norfolk Southern (NSC)

Market Cap: $47.11 billion

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 Should You Sell NSC?

1. Underwhelming unit sales over the past two years show it’s struggled to increase its sales volumes and had to rely on price increases

2. Earnings per share have contracted by 7.6% annually over the last two years, a headwind for returns as stock prices often echo long-term EPS performance

3. Free cash flow margin shrank by 7.8 percentage points over the last five years, suggesting the company is consuming more capital to stay competitive

Norfolk Southern’s stock price of $214.48 implies a valuation ratio of 15.8x forward price-to-earnings. If you’re considering NSC for your portfolio, see our FREE research report to learn more .

Packaging Corporation of America (PKG)

Market Cap: $16.14 billion

Founded in 1959, Packaging Corporation of America (NYSE: PKG) produces containerboard and corrugated packaging products as well as displays and package protection.

Why Do We Pass on PKG?

1. Disappointing unit sales over the past two years indicate demand is soft and that the company may need to revise its strategy

2. Earnings per share have dipped by 9.9% annually over the past two years, which is concerning because stock prices follow EPS over the long term

3. 3 percentage point decline in its free cash flow margin over the last five years reflects the company’s increased investments to defend its market position

Packaging Corporation of America is trading at $183.63 per share, or 15.9x forward price-to-earnings. Dive into our free research report to see why there are better opportunities than PKG .

One Industrials Stock to Watch:

ESCO (ESE)

Market Cap: $3.67 billion

A developer of the communication systems used in the Batmobile of “The Dark Knight,” ESCO (NYSE:ESE) is a provider of engineered components for the aerospace, defense, and utility sectors.