3 Industrials Stocks That Fall Short

3 Industrials Stocks That Fall Short

Petr Huřťák

Fri, February 20, 2026 at 1:45 PM GMT+9 3 min read

In this article:

AVAV

+6.11%

HII

+4.30%

F

-0.51%

^GSPC

-0.28%

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 23.5% for the sector - higher than the S&P 500’s 7.6% return.

Regardless of these results, investors should tread carefully. The diversity of companies in this space means that not all are created equal or well-positioned for the inescapable downturn. Taking that into account, here are three industrials stocks we’re steering clear of.

AeroVironment (AVAV)

Market Cap: $14 billion

Focused on the future of autonomous military combat, AeroVironment (NASDAQ:AVAV) specializes in advanced unmanned aircraft systems and electric vehicle charging solutions.

Why Does AVAV Worry Us?

Day-to-day expenses have swelled relative to revenue over the last five years as its operating margin fell by 8.4 percentage points

Performance over the past two years shows its incremental sales were much less profitable, as its earnings per share fell by 9.9% annually

Free cash flow margin shrank by 19 percentage points over the last five years, suggesting the company is consuming more capital to stay competitive

AeroVironment is trading at $285.50 per share, or 58.5x forward P/E. Read our free research report to see why you should think twice about including AVAV in your portfolio, it’s free.

Huntington Ingalls (HII)

Market Cap: $17.39 billion

Building Nimitz-class aircraft carriers used in active service, Huntington Ingalls (NYSE:HII) develops marine vessels and their mission systems and maintenance services.

Why Do We Avoid HII?

Large revenue base makes it harder to increase sales quickly, and its annual revenue growth of 4.4% over the last two years was below our standards for the industrials sector

Estimated sales growth of 3.5% for the next 12 months is soft and implies weaker demand

Earnings per share have dipped by 2.1% annually over the past five years, which is concerning because stock prices follow EPS over the long term

At $444.77 per share, Huntington Ingalls trades at 24.5x forward P/E. Dive into our free research report to see why there are better opportunities than HII.

Ford (F)

Market Cap: $54.97 billion

Established to make automobiles accessible to a broader segment of the population, Ford (NYSE:F) designs, manufactures, and sells a variety of automobiles, trucks, and electric vehicles.

Why Do We Pass on F?

Flat vehicles sold over the past two years show it’s struggled to increase its sales volumes and had to rely on price increases

Eroding returns on capital suggest its historical profit centers are aging

 






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Ford’s stock price of $13.79 implies a valuation ratio of 9x forward P/E. If you’re considering F for your portfolio, see our FREE research report to learn more.

Stocks We Like More

The market’s up big this year - but there’s a catch. Just 4 stocks account for half the S&P 500’s entire gain. That kind of concentration makes investors nervous, and for good reason. While everyone piles into the same crowded names, smart investors are hunting quality where no one’s looking - and paying a fraction of the price. Check out the high-quality names we’ve flagged 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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