StockStory rates Dycom and GE Vernova favorably, flags Helios risk

StockStory has identified two industrials stocks it believes can generate sustainable market-beating returns, while flagging a third company as facing potential headwinds. The analysis comes as the broader industrials sector has tumbled by 7% over the past six months, a drawdown that contrasts sharply with the S&P 500's 9.7% ascent over the same period. The publication attributes this bearish outlook to volatile macroeconomic factors, specifically interest rates, which influence capital spending.

Among the names highlighted for potential outperformance is Dycom Industries (NYSE: DY), a telecommunications infrastructure builder with a market capitalization of $7.77 billion. StockStory points to Dycom's annual revenue growth of 24.6% over the last two years as evidence of increasing market share. The company's earnings per share increased by 37% annually over that same period, outpacing its revenue gains. Additionally, Dycom's free cash flow margin jumped by 6.4 percentage points over the last five years. The stock is currently trading at $257.89 per share, representing a 14.1x forward P/E ratio.

GE Vernova (NYSE: GEV), which was spun off from General Electric's energy business in 2023, is the second stock receiving a favorable assessment. With a market cap of $246.7 billion, GE Vernova designs and services power generation equipment and grid technologies. StockStory cites the company's exceptional 10.7% annual revenue growth over the last two years as a sign of expanding market share. Shareholder returns have been amplified by share repurchases, with annual earnings per share growth reaching 169% over the last two years, significantly exceeding revenue gains. The company's free cash flow margin grew by 45.3 percentage points over the last four years. GE Vernova's stock price of $924 implies a valuation ratio of 44.8x forward P/E.

In contrast, Helios Technologies (NYSE: HLIO) is identified as the stock facing trouble. The motion and electronic control component manufacturer has a market cap of $2.24 billion. StockStory notes that Helios has shown an absence of organic revenue growth over the past two years, suggesting it may need to rely on acquisitions for expansion. Costs have risen faster than revenue over the last five years, causing operating margins to decline by 7.1 percentage points. Despite revenue growth over that five-year period, earnings per share remained flat, partly due to the issuance of new shares. Helios is trading at $67.90 per share, or 20.5x forward P/E.