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5 Stocks to Buy on Record Rise in Industrial Production
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Industrial production staged a strong rebound in December with unexpectedly warm weather leading to an increase in utility output over the month. Manufacturing output also increased, brightening the outlook for a sector which had remained embattled over nearly all of last year.
With the new administration set to introduce new policies to support the sector and industry as a whole, better times are surely in the offing. Picking stocks related to industrial production makes for a smart choice at this time.
Increase Highest in 2 Years
According to the Federal Reserve, industrial production increased by 0.8% in December, higher than the consensus estimate of a 0.7% increase. This was the highest increase in percentage terms since 2014. This substantial increase in output follows a decline of 0.7% in November, revised further downward from the initial estimate of a fall of 0.4%.
Additionally, capacity utilization increased from 74.9% in November to 75.5%. An increase of 6.6% in utilities output was the primary driver behind last month’s gains. Even though mining output remained unchanged, manufacturing output increased by 0.2%. Production also experienced a year-over-year increase of 0.5%.
Positive Trend to Continue
According to several economists, despite the volatility observed in utility output, the overall trend for the sector has improved. Apart from utilities, other manufacturing sectors also exhibited gains over December. Motor vehicles, consumer goods and business equipment all witnessed an uptick in production.
A brighter outlook is in keeping with ISM manufacturing data released earlier this month. The ISM manufacturing index rose from 53.2% in November to 54.7% in December, reaching its highest settlement in the last two years. Additionally, employment for the sector increased by 17,000 last month while hours worked by workers involved in production increased by 0.4%.
Our Choices
Industrial production has affected a crucial turnaround in December. Economists and analysts alike feel that the tide has turned for the sector and the new administration’s policies can only improve its outlook further.
Adding stocks from the sector to your portfolio makes for a prudent move at this point. However, picking winning stocks may be difficult.
This is where our VGM score comes in. Here V stands for Value, G for Growth and M for Momentum and the score is a weighted combination of these three scores. Such a score allows you to eliminate the negative aspects of stocks and select winners. However, it is important to keep in mind that each Style Score will carry a different weight while arriving at a VGM score.
We have narrowed down our search to the following stocks based on a good Zacks Rank and VGM score.
Heritage-Crystal Clean, Inc concentrates on servicing the automotive repair, commercial and industrial marketplaces.
Heritage-Crystal Clean has a Zacks Rank #1 (Strong Buy) and a VGM Score of A. The company has expected earnings growth of more than 100% for the current year. The stock has returned 60.4% over the last one year, outperforming the Zacks Pollution Control Market sector, which has gained 54.8% over the same period.
ABB Ltd. is a leading power and automation technology company, offering a wide range of products systems, solutions and services that are designed to boost industrial productivity, power-grid reliability as well as energy efficiency.
ABB has a Zacks Rank #1 and a VGM Score of B. The company has expected earnings growth of 13.3% for the current year. Its earnings estimate for the current year has improved by 4.5% over the last 30 days. The stock has returned 39.3% over the last one year, outperforming the Zacks Manufacturing - Electronics Market sector, which has gained 39.1% over the same period.
Deere & Company (DE - Free Report) is engaged in the production and distribution of agricultural and forestry equipment, construction equipment and engines worldwide.
Deere has a VGM Score of B. The forward price-to-earnings (P/E) ratio for the current financial year (F1) is 24.03, lower than the industry average of 24.56. The stock has returned 46.2% over the last one year, outperforming the Zacks Manufacturing - Farm Equipment Market sector, which has gained 40.8% over the same period. The stock has a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Greif, Inc. (GEF - Free Report) is a leading global producer of industrial packaging products and services with manufacturing facilities located in over 50 countries.
Greif has a Zacks Rank #2 (Buy) and a VGM Score of A. The company has expected earnings growth of 21.9% for the current year. The stock has returned 102.1% over the last one year, outperforming the Zacks Containers - Metal and Glass Market sector, which has gained 22.2% over the same period.
Worthington Industries, Inc. (WOR - Free Report) is a leading diversified metal processing companies.
Worthington Industries has a Zacks Rank #2 and a VGM Score of A. The company has expected earnings growth of 31.9% for the current year. It has a P/E (F1) of 14.35, which is lower than the industry average of 14.82. The stock has returned 68.8% over the last one year, outperforming the Zacks Metal Products - Procurement and Fabrication Market sector, which has gained 58% over the same period.
Zacks' Top 10 Stocks for 2017
In addition to the stocks discussed above, would you like to know about our 10 finest buy-and-hold tickers for the entirety of 2017?
Who wouldn't? As of early December, the 2016 Top 10 produced 5 double-digit winners including oil and natural gas giant Pioneer Natural Resources which racked up a stellar +50% gain. The new list is painstakingly hand-picked from 4,400 companies covered by the Zacks Rank. Be among the very first to see it>>
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5 Stocks to Buy on Record Rise in Industrial Production
Industrial production staged a strong rebound in December with unexpectedly warm weather leading to an increase in utility output over the month. Manufacturing output also increased, brightening the outlook for a sector which had remained embattled over nearly all of last year.
With the new administration set to introduce new policies to support the sector and industry as a whole, better times are surely in the offing. Picking stocks related to industrial production makes for a smart choice at this time.
Increase Highest in 2 Years
According to the Federal Reserve, industrial production increased by 0.8% in December, higher than the consensus estimate of a 0.7% increase. This was the highest increase in percentage terms since 2014. This substantial increase in output follows a decline of 0.7% in November, revised further downward from the initial estimate of a fall of 0.4%.
Additionally, capacity utilization increased from 74.9% in November to 75.5%. An increase of 6.6% in utilities output was the primary driver behind last month’s gains. Even though mining output remained unchanged, manufacturing output increased by 0.2%. Production also experienced a year-over-year increase of 0.5%.
Positive Trend to Continue
According to several economists, despite the volatility observed in utility output, the overall trend for the sector has improved. Apart from utilities, other manufacturing sectors also exhibited gains over December. Motor vehicles, consumer goods and business equipment all witnessed an uptick in production.
A brighter outlook is in keeping with ISM manufacturing data released earlier this month. The ISM manufacturing index rose from 53.2% in November to 54.7% in December, reaching its highest settlement in the last two years. Additionally, employment for the sector increased by 17,000 last month while hours worked by workers involved in production increased by 0.4%.
Our Choices
Industrial production has affected a crucial turnaround in December. Economists and analysts alike feel that the tide has turned for the sector and the new administration’s policies can only improve its outlook further.
Adding stocks from the sector to your portfolio makes for a prudent move at this point. However, picking winning stocks may be difficult.
This is where our VGM score comes in. Here V stands for Value, G for Growth and M for Momentum and the score is a weighted combination of these three scores. Such a score allows you to eliminate the negative aspects of stocks and select winners. However, it is important to keep in mind that each Style Score will carry a different weight while arriving at a VGM score.
We have narrowed down our search to the following stocks based on a good Zacks Rank and VGM score.
Heritage-Crystal Clean, Inc concentrates on servicing the automotive repair, commercial and industrial marketplaces.
Heritage-Crystal Clean has a Zacks Rank #1 (Strong Buy) and a VGM Score of A. The company has expected earnings growth of more than 100% for the current year. The stock has returned 60.4% over the last one year, outperforming the Zacks Pollution Control Market sector, which has gained 54.8% over the same period.
ABB Ltd. is a leading power and automation technology company, offering a wide range of products systems, solutions and services that are designed to boost industrial productivity, power-grid reliability as well as energy efficiency.
ABB has a Zacks Rank #1 and a VGM Score of B. The company has expected earnings growth of 13.3% for the current year. Its earnings estimate for the current year has improved by 4.5% over the last 30 days. The stock has returned 39.3% over the last one year, outperforming the Zacks Manufacturing - Electronics Market sector, which has gained 39.1% over the same period.
Deere & Company (DE - Free Report) is engaged in the production and distribution of agricultural and forestry equipment, construction equipment and engines worldwide.
Deere has a VGM Score of B. The forward price-to-earnings (P/E) ratio for the current financial year (F1) is 24.03, lower than the industry average of 24.56. The stock has returned 46.2% over the last one year, outperforming the Zacks Manufacturing - Farm Equipment Market sector, which has gained 40.8% over the same period. The stock has a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Greif, Inc. (GEF - Free Report) is a leading global producer of industrial packaging products and services with manufacturing facilities located in over 50 countries.
Greif has a Zacks Rank #2 (Buy) and a VGM Score of A. The company has expected earnings growth of 21.9% for the current year. The stock has returned 102.1% over the last one year, outperforming the Zacks Containers - Metal and Glass Market sector, which has gained 22.2% over the same period.
Worthington Industries, Inc. (WOR - Free Report) is a leading diversified metal processing companies.
Worthington Industries has a Zacks Rank #2 and a VGM Score of A. The company has expected earnings growth of 31.9% for the current year. It has a P/E (F1) of 14.35, which is lower than the industry average of 14.82. The stock has returned 68.8% over the last one year, outperforming the Zacks Metal Products - Procurement and Fabrication Market sector, which has gained 58% over the same period.
Zacks' Top 10 Stocks for 2017
In addition to the stocks discussed above, would you like to know about our 10 finest buy-and-hold tickers for the entirety of 2017?
Who wouldn't? As of early December, the 2016 Top 10 produced 5 double-digit winners including oil and natural gas giant Pioneer Natural Resources which racked up a stellar +50% gain. The new list is painstakingly hand-picked from 4,400 companies covered by the Zacks Rank. Be among the very first to see it>>