Over the past two years, the manufacturing sector in the United States has been badly hit by the Federal Reserve’s tight monetary policy regime. However, the sector rebounded in January amid an uptick in new orders and production.
The Institute for Supply Management (“ISM”) said on Thursday that the manufacturing PMI came in at 49.1 in January against a consensus of 47.6, increasing significantly from the December number, which was revised down to 47.1. This marks the 15th straight month that the PMI has remained under 50. This indicates a contraction in manufacturing.
ISM’s indexes for new orders and production both moved back into the expansion territory though, raising hopes of a recovery in the sector. New orders expanded for just the second time in 20 months, coming in at 52.5, a whopping 5.5 percentage points increase over December’s seasonally adjusted reading of 47. The Production Index, which has been in contraction in 10 of the last 14 months, registered 50.4, 0.5 percentage point higher than the seasonally adjusted December reading of 49.9.
However, with the Fed leaving interest rates unchanged on Wednesday, the sector should be recovering even further in the coming months. Fed Chair Jerome Powell’s comments have come in handy. Powell, while endorsing the U.S. economy’s strength, mentioned that interest rates have already peaked and would move lower in the coming months. Market participants are currently expecting the first rate cut to be announced in June. A decline in borrowing costs over time would entail further capital spending, which would act as a boost to the sector.
Thus, we have selected four manufacturing stocks that are likely to be gaining ground in the ensuing months and should be looked into now. The stocks below flaunt a Zacks Rank #1 (Strong Buy) or 2 (Buy). The search was also narrowed down with a VGM Score of A or B. Here V stands for Value, G for Growth and M for Momentum; the score is a weighted combination of these three metrics. Such a score allows you to eliminate the negative aspects of stocks and select winners.
Installed Building Products, Inc. (IBP - Free Report) is a company that engages in the manufacturing and installation of insulation, waterproofing, fire-stopping, fireproofing, garage doors, rain gutters, window blinds, shower doors, closet shelving and mirrors, and other products across the United States.
IBP’s expected earnings growth rate for the current year is 13%. The Zacks Consensus Estimate for its next-year earnings has improved 1.1% over the past 60 days. The company has a Zacks Rank #1 and a VGM Score of B. You can see the complete list of today’s Zacks #1 Rank stocks here.
H&E Equipment Services, Inc. (HEES - Free Report) is an integrated equipment services company focused on heavy construction and industrial equipment.
HEES’ expected earnings growth rate for the current year is 21.6%. The Zacks Consensus Estimate for its next-year earnings has improved 1.7% over the past 60 days. The company has a Zacks Rank #2 and a VGM Score of A.
AZZ Inc. (AZZ - Free Report) is a provider of galvanizing and a variety of metal coating solutions and coil coating solutions to a broad range of end markets in the United States.
AZZ’s expected earnings growth rate for the current year is 23.6%. The Zacks Consensus Estimate for its current-year earnings has improved 4.9% over the past 60 days. The company has a Zacks Rank #1 and a VGM Score of A.
Holley Inc. (HLLY - Free Report) is a designer, marketer and manufacturer of high-performance automotive aftermarket products.
HLLY’s expected earnings growth rate for the current year is 214.3%. The Zacks Consensus Estimate for its current-year earnings has improved 4.8% over the past 60 days. The company has a Zacks Rank #2 and a VGM Score of A.
Just Released: Zacks Top 10 Stocks for 2024
Hurry – you can still get in early on our 10 top tickers for 2024. Hand-picked by Zacks Director of Research, Sheraz Mian, this portfolio has been stunningly and consistently successful. From inception in 2012 through November, 2023, the Zacks Top 10 Stocks gained +974.1%, nearly TRIPLING the S&P 500’s +340.1%. Sheraz has combed through 4,400 companies covered by the Zacks Rank and handpicked the best 10 to buy and hold in 2024. You can still be among the first to see these just-released stocks with enormous potential.
See New Top 10 Stocks >>
Over the past two years, the manufacturing sector in the United States has been badly hit by the Federal Reserve’s tight monetary policy regime. However, the sector rebounded in January amid an uptick in new orders and production.
The Institute for Supply Management (“ISM”) said on Thursday that the manufacturing PMI came in at 49.1 in January against a consensus of 47.6, increasing significantly from the December number, which was revised down to 47.1. This marks the 15th straight month that the PMI has remained under 50. This indicates a contraction in manufacturing.
ISM’s indexes for new orders and production both moved back into the expansion territory though, raising hopes of a recovery in the sector. New orders expanded for just the second time in 20 months, coming in at 52.5, a whopping 5.5 percentage points increase over December’s seasonally adjusted reading of 47. The Production Index, which has been in contraction in 10 of the last 14 months, registered 50.4, 0.5 percentage point higher than the seasonally adjusted December reading of 49.9.
However, with the Fed leaving interest rates unchanged on Wednesday, the sector should be recovering even further in the coming months. Fed Chair Jerome Powell’s comments have come in handy. Powell, while endorsing the U.S. economy’s strength, mentioned that interest rates have already peaked and would move lower in the coming months. Market participants are currently expecting the first rate cut to be announced in June. A decline in borrowing costs over time would entail further capital spending, which would act as a boost to the sector.
Thus, we have selected four manufacturing stocks that are likely to be gaining ground in the ensuing months and should be looked into now. The stocks below flaunt a Zacks Rank #1 (Strong Buy) or 2 (Buy). The search was also narrowed down with a VGM Score of A or B. Here V stands for Value, G for Growth and M for Momentum; the score is a weighted combination of these three metrics. Such a score allows you to eliminate the negative aspects of stocks and select winners.
Installed Building Products, Inc. (IBP - Free Report) is a company that engages in the manufacturing and installation of insulation, waterproofing, fire-stopping, fireproofing, garage doors, rain gutters, window blinds, shower doors, closet shelving and mirrors, and other products across the United States.
IBP’s expected earnings growth rate for the current year is 13%. The Zacks Consensus Estimate for its next-year earnings has improved 1.1% over the past 60 days. The company has a Zacks Rank #1 and a VGM Score of B. You can see the complete list of today’s Zacks #1 Rank stocks here.
H&E Equipment Services, Inc. (HEES - Free Report) is an integrated equipment services company focused on heavy construction and industrial equipment.
HEES’ expected earnings growth rate for the current year is 21.6%. The Zacks Consensus Estimate for its next-year earnings has improved 1.7% over the past 60 days. The company has a Zacks Rank #2 and a VGM Score of A.
AZZ Inc. (AZZ - Free Report) is a provider of galvanizing and a variety of metal coating solutions and coil coating solutions to a broad range of end markets in the United States.
AZZ’s expected earnings growth rate for the current year is 23.6%. The Zacks Consensus Estimate for its current-year earnings has improved 4.9% over the past 60 days. The company has a Zacks Rank #1 and a VGM Score of A.
Holley Inc. (HLLY - Free Report) is a designer, marketer and manufacturer of high-performance automotive aftermarket products.
HLLY’s expected earnings growth rate for the current year is 214.3%. The Zacks Consensus Estimate for its current-year earnings has improved 4.8% over the past 60 days. The company has a Zacks Rank #2 and a VGM Score of A.
Just Released: Zacks Top 10 Stocks for 2024
Hurry – you can still get in early on our 10 top tickers for 2024. Hand-picked by Zacks Director of Research, Sheraz Mian, this portfolio has been stunningly and consistently successful. From inception in 2012 through November, 2023, the Zacks Top 10 Stocks gained +974.1%, nearly TRIPLING the S&P 500’s +340.1%. Sheraz has combed through 4,400 companies covered by the Zacks Rank and handpicked the best 10 to buy and hold in 2024. You can still be among the first to see these just-released stocks with enormous potential.
See New Top 10 Stocks >>
Get the latest research report on AZZ - FREE
Get the latest research report on HEES - FREE
Get the latest research report on IBP - FREE
Get the latest research report on HLLY - FREE