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Industrial Production Rises in June: 5 Stocks Worth Buying
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Companies across multiple sectors are putting in efforts to overcome the pandemic-led disruptions, which are expected to lead to a recovery phase. Also, some important metrics — including industrial production, unemployment level and ISM Manufacturing PMI — are improving.
Industrial production is the key to understand the operating environment of the manufacturing, utilities and mining sectors in a country. After major setbacks in March and April due to the pandemic, industrial production in the United States recorded growth in both May and June.
Going by the recently released data by the Federal Reserve, the metric increased 5.4% month over month in June. This marks an improvement from 1.4% growth recorded in May 2020 and also the highest monthly gain since the beginning of 2020. Notably, industrial production in the United States slipped 0.4% in January, inched up 0.1% in February, fell 4.4% in March and declined 12.7% in April.
Also, stock markets have shown signs of recovery, with the S&P 500 growing 11.7% in the past three months, while the Nasdaq and NYSE have risen 22% and 10.6%, respectively. The DOW Industrial index has grown 10.8% during the same timeframe. In addition, the Zacks Industrial Products sector has risen 19.1% in the past three months.
Factors Behind the Monthly Gain in Industrial Production
It is noteworthy here that the index benefitted mostly from 7.2% growth in the manufacturing sector — with a significant rise witnessed in the manufacturing of motor vehicles and parts. Also, production in plastics, rubber, publishing, leather and apparel industries increased.
Further, output for the utilities sector increased 4.2% on improvements in electric and gas utilities. On the flip side, output from the mining sector was down 2.9% from the previous month.
In June, capacity utilization for the manufacturing sector was at 66.9%, up 4.6 percentage points from the previous month. Also, capacity utilization for the utilities sector was up by 2.8 percentage points to 72.3%. However, capacity utilization for the mining sector fell 2 percentage points to 75%.
Suitable Investment Picks
Multiple companies are exhibiting growth and look well-positioned to deal with the pandemic scares. A price chart and brief discussions on five industrial products stocks, which might interest investors, are provided below.
Past Three-Month Price Performance
AGCO Corporation (AGCO - Free Report) : The Duluth, GA-based company currently sports a Zacks Rank #1 (Strong Buy). It specializes in manufacturing and distributing agricultural equipment and related replacement parts.
The company’s shares have gained 25.1% in the past three months.
In the past 60 days, the Zacks Consensus Estimate for its earnings has been raised 13.4% and 4.5% for 2020 and 2021, respectively. Also, the company delivered an earnings surprise of 186.67% last quarter.
The Middleby Corporation (MIDD - Free Report) : The Elgin, IL-based company currently carries a Zacks Rank #2 (Buy). It deals in cooking, warming, food preparation and packaging equipment. The products offered are mainly used in industrial processing, commercial and residential markets.
The company’s shares have gained 60.9% in the past three months. Also, the Zacks Consensus Estimate for its earnings has been raised 1.8% for 2020 and 1% for 2021 in the past 60 days. Its earnings surprise in the last quarter was 12.31%.
Stanley Black & Decker, Inc. (SWK - Free Report) : The New Britain, CT-based company currently carries a Zacks Rank #2. It makes and distributes power and hand tools and related accessories, healthcare solutions, engineered fastening systems, electronic security solutions, and other products.
The company’s shares have gained 34.7% in the past three months. In the past 60 days, the Zacks Consensus Estimate for its earnings has been raised by 16.1% for 2020 and 9.9% for 2021. In the last reported quarter, the company delivered an earnings surprise of 6.19%.
Altra Industrial Motion Corp. : The Braintree, MA-based company currently carries a Zacks Rank #2. It specializes in manufacturing and distributing various motion control, electromechanical power transmission, and automation products. The company’s shares have surged 78% in the past three months.
In the past 60 days, the Zacks Consensus Estimate for its earnings has been raised by 1.1% for 2020 and 0.4% for 2021. In the last report quarter, the company delivered an earnings surprise of 47.73%.
Fortune Brands Home & Security, Inc. : The Deerfield, IL-based company presently sports a Zacks Rank #1. It manufactures and provides home and security products.
The company’s shares have gained 46.8% in the past three months. In the past 60 days, the Zacks Consensus Estimate for its earnings has been raised by 5.6% for 2020 and by 4.5% for 2021. The company’s earnings surprise in the last quarter was 17.39%.
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Industrial Production Rises in June: 5 Stocks Worth Buying
Companies across multiple sectors are putting in efforts to overcome the pandemic-led disruptions, which are expected to lead to a recovery phase. Also, some important metrics — including industrial production, unemployment level and ISM Manufacturing PMI — are improving.
Industrial production is the key to understand the operating environment of the manufacturing, utilities and mining sectors in a country. After major setbacks in March and April due to the pandemic, industrial production in the United States recorded growth in both May and June.
Going by the recently released data by the Federal Reserve, the metric increased 5.4% month over month in June. This marks an improvement from 1.4% growth recorded in May 2020 and also the highest monthly gain since the beginning of 2020. Notably, industrial production in the United States slipped 0.4% in January, inched up 0.1% in February, fell 4.4% in March and declined 12.7% in April.
Also, stock markets have shown signs of recovery, with the S&P 500 growing 11.7% in the past three months, while the Nasdaq and NYSE have risen 22% and 10.6%, respectively. The DOW Industrial index has grown 10.8% during the same timeframe. In addition, the Zacks Industrial Products sector has risen 19.1% in the past three months.
Factors Behind the Monthly Gain in Industrial Production
It is noteworthy here that the index benefitted mostly from 7.2% growth in the manufacturing sector — with a significant rise witnessed in the manufacturing of motor vehicles and parts. Also, production in plastics, rubber, publishing, leather and apparel industries increased.
Further, output for the utilities sector increased 4.2% on improvements in electric and gas utilities. On the flip side, output from the mining sector was down 2.9% from the previous month.
In June, capacity utilization for the manufacturing sector was at 66.9%, up 4.6 percentage points from the previous month. Also, capacity utilization for the utilities sector was up by 2.8 percentage points to 72.3%. However, capacity utilization for the mining sector fell 2 percentage points to 75%.
Suitable Investment Picks
Multiple companies are exhibiting growth and look well-positioned to deal with the pandemic scares. A price chart and brief discussions on five industrial products stocks, which might interest investors, are provided below.
Past Three-Month Price Performance
AGCO Corporation (AGCO - Free Report) : The Duluth, GA-based company currently sports a Zacks Rank #1 (Strong Buy). It specializes in manufacturing and distributing agricultural equipment and related replacement parts.
The company’s shares have gained 25.1% in the past three months.
You can see the complete list of today’s Zacks #1 Rank stocks here.
In the past 60 days, the Zacks Consensus Estimate for its earnings has been raised 13.4% and 4.5% for 2020 and 2021, respectively. Also, the company delivered an earnings surprise of 186.67% last quarter.
The Middleby Corporation (MIDD - Free Report) : The Elgin, IL-based company currently carries a Zacks Rank #2 (Buy). It deals in cooking, warming, food preparation and packaging equipment. The products offered are mainly used in industrial processing, commercial and residential markets.
The company’s shares have gained 60.9% in the past three months. Also, the Zacks Consensus Estimate for its earnings has been raised 1.8% for 2020 and 1% for 2021 in the past 60 days. Its earnings surprise in the last quarter was 12.31%.
Stanley Black & Decker, Inc. (SWK - Free Report) : The New Britain, CT-based company currently carries a Zacks Rank #2. It makes and distributes power and hand tools and related accessories, healthcare solutions, engineered fastening systems, electronic security solutions, and other products.
The company’s shares have gained 34.7% in the past three months. In the past 60 days, the Zacks Consensus Estimate for its earnings has been raised by 16.1% for 2020 and 9.9% for 2021. In the last reported quarter, the company delivered an earnings surprise of 6.19%.
Altra Industrial Motion Corp. : The Braintree, MA-based company currently carries a Zacks Rank #2. It specializes in manufacturing and distributing various motion control, electromechanical power transmission, and automation products. The company’s shares have surged 78% in the past three months.
In the past 60 days, the Zacks Consensus Estimate for its earnings has been raised by 1.1% for 2020 and 0.4% for 2021. In the last report quarter, the company delivered an earnings surprise of 47.73%.
Fortune Brands Home & Security, Inc. : The Deerfield, IL-based company presently sports a Zacks Rank #1. It manufactures and provides home and security products.
The company’s shares have gained 46.8% in the past three months. In the past 60 days, the Zacks Consensus Estimate for its earnings has been raised by 5.6% for 2020 and by 4.5% for 2021. The company’s earnings surprise in the last quarter was 17.39%.
Breakout Biotech Stocks with Triple-Digit Profit Potential
The biotech sector is projected to surge beyond $775 billion by 2024 as scientists develop treatments for thousands of diseases. They’re also finding ways to edit the human genome to literally erase our vulnerability to these diseases.
Zacks has just released Century of Biology: 7 Biotech Stocks to Buy Right Now to help investors profit from 7 stocks poised for outperformance. Our recent biotech recommendations have produced gains of +50%, +83% and +164% in as little as 2 months. The stocks in this report could perform even better.
See these 7 breakthrough stocks now>>