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The industrial and automotive recovery is boosting companies like NN Inc. (NNBR - Snapshot Report) which saw sales rise 38% in the third quarter as global demand remained strong.

NN is in the thick of the industrial recovery as it manufactures high precision bearing components, industrial plastic and rubber products and precision metal components.

It also has exposure worldwide through 11 manufacturing plants including one in China so it is able to respond to growing demand in the emerging markets.

Sales Up 49% in the First 9 Months of 2010

It's not hard to do better than 2009, when the industrial companies were getting crushed by the recession. But NN has now seen strong demand for several quarters in a row.

Sales rose to $91 million from $66.1 million a year ago and jumped 49% in the first 9 months of the year. The company saw increased demand for all of the company's products, but especially in the industrial and automotive end markets.

Earnings per share was 15 cents which did miss the Zacks Consensus by a penny. It was the first miss in 4 quarters.

Strong Demand Expected to Continue Into 2011

NN is bullish about the fourth quarter and the first quarter of 2011. Historically, the third quarter is normally the company's weakest quarter but there was only a small decrease in sales from the second quarter this year as demand remained strong.

Its customers are not signaling any slowdown heading into the end of the year so NN is now expecting to be near the top end of its sales guidance range of $350 million to $360 million.

Zacks Consensus Estimates Rise

Given the company's optimistic outlook and the big sales increase in the third quarter, analysts have been raising estimates for 2010 and 2011.

The 2010 Zacks Consensus has risen 8 cents to 81 cents per share in the last 30 days.

That's a huge turnaround from 2009 as it posted a $1.43 per share loss last year.

Double digit earnings growth is expected to continue into 2011 as 2 estimates have moved higher for the year in the last month, boosting the 2011 Zacks Consensus to $1.00 from 90 cents. That is earnings growth of 23%.

Still a Value Stock

NN Inc. still has an attractive forward price-to-earnings ratio of 12.5 which is well under the overall market at 15.2x.

It also has a price-to-book of 2.2, within the value range which is under 3.0.

NN Inc. is a Zacks #2 Rank (buy) stock.

Share have broken out to a 2-year high but are still below their pre-recession levels.

Read the Oct 7, 2010 article.

Update to Previous Value Zacks Rank Buy Stocks

Generic drugs are the sweet spot for the drug makers. Par Pharmaceutical Companies Inc. (PRX) recently surprised on the Zacks Consensus for the 8th quarter in a row. It's stock has been on a roll but shares still trade at just 12.5x forward estimates. Read the full article.

The U.S. and European banks may still be dealing with debt but the South American banks are hot as their economies expand. Banco Macro S.A. (BMA) in Argentina, recently surprised on the Zacks Consensus for the 6th straight quarter. This Zacks #1 Rank (strong buy) is expected to grow earnings 20.4% in 2010. Read the full article.

Shoes have been a hot fashion statement during the recession. The Timberland Company (TBL) is expected to grow earnings by 68% in 2010 as shoes and accessories were an easy way to spruce up the wardrobe during dark times. Read the full article.

The auto industry is smoking hot. Autoliv Inc. (ALV), which makes automobile safety systems, reported a record third quarter in October. Even though this Zacks #1 Rank (strong buy) has soared off its March 2009 low, shares are still trading at an affordable 12.3x forward estimates. Read the full article.

Tracey Ryniec is the Value Stock Strategist for Zacks.com. She is also the Editor in charge of the market-beating Zacks Value Trader service. You can follow her at twitter.com/traceyryniec.

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