Even if they go mostly unnoticed, industrial businesses are the backbone of our country. Unfortunately, this role also comes with a demand profile tethered to the ebbs and flows of the broader economy, and investors seem to be forecasting a downturn - over the past six months, the industry has pulled back by 16.2%. This performance was worse than the S&P 500’s 9.3% loss.

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 industrials stock poised to generate sustainable market-beating returns and two we’re swiping left on.

Two Industrials Stocks to Sell:

Huntington Ingalls (HII)

Market Cap: $7.85 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 Should You Dump HII?

1. Average backlog growth of 1.6% over the past two years was mediocre and suggests fewer customers signed long-term contracts

2. Free cash flow margin shrank by 7.7 percentage points over the last five years, suggesting the company is consuming more capital to stay competitive

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

Huntington Ingalls is trading at $200.03 per share, or 13x forward price-to-earnings. Dive into our free research report to see why there are better opportunities than HII .

Great Lakes Dredge & Dock (GLDD)

Market Cap: $584.6 million

Founded as Lydon & Drews dredging company, Great Lakes Dredge & Dock (NASDAQ:GLDD) provides dredging services, land reclamation, and coastal protection projects in the United States and internationally.

Why Do We Think GLDD Will Underperform?

1. Sales trends were unexciting over the last five years as its 1.4% annual growth was below the typical industrials company

2. Free cash flow margin dropped by 11.6 percentage points over the last five years, implying the company became more capital intensive as competition picked up

3. Diminishing returns on capital from an already low starting point show that neither management’s prior nor current bets are going as planned

Great Lakes Dredge & Dock’s stock price of $8.68 implies a valuation ratio of 10.9x forward price-to-earnings. To fully understand why you should be careful with GLDD, check out our full research report (it’s free) .

One Industrials Stock to Watch:

Enphase (ENPH)

Market Cap: $7.17 billion

The first company to successfully commercialize the solar micro-inverter, Enphase (NASDAQ:ENPH) manufactures software-driven home energy products.