Back to top

Image: Bigstock

US Manufacturing Activity Hits 15-Month High in July: 5 Picks

Read MoreHide Full Article

U.S. manufacturing activity expanded for the third month in a row in July, per the Institute for Supply Management’s (ISM) report released on Aug 3. The ISM’s manufacturing index rose to 54.2 in July from 52.6 in the prior month and beat the consensus estimates of 53.5.

Manufacturing activityexpanded in July at the fastest pace since March 2019 despite resurgence in new coronavirus cases, which has been driving panic and raising concerns about sustainability of economic recovery.

Of the 18 manufacturing industries, 13 reported growth in the month reported. The transportation equipment, machinery and fabricated metal industries contracted in July; however, steady growth has been recorded in the wood products, furniture and textiles industry. This is because the work-and-stay at home trend drove several households into revamping and remodeling of living and working space. Along with that, a significant rise was observed in the primary metals and electrical equipment, appliances & components industry.

Additionally, ISM’s measure of production also increased to 62.1 from 57.3 in July, its highest level since August 2018. While new orders rose to 61.5 from 56.4 in June, it is the strongest gain since September 2018. In July, more factories ramped up production even with firmer orders and leaner inventories.

The pandemic forced factories to shutdown production and pushed retailers to rely on inventories to meet demand. As witnessed, ISM’s index of customer inventories dropped to 41.6 for the month, its lowest level this year. Factories are restarting production to stock up inventories as stockpiles shrank at a rapid pace in the past few months.

Employment across factories continued to improve in July but has remained in contraction territory for a year now. The ISM’s manufacturing index rose to 44.3 in July from 42.1 in the month before.

5 Stocks to Buy

Given the current scenario, the coronavirus pandemic will continue to create hurdles in the path of economic recovery. However, rise in manufacturing activities also point to economic rebound.

Hence, taking the positives under consideration, we have shortlisted five stocks that are poised to grow with the expansion manufacturing activities. What’s more? These stocks flaunt a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Chart Industries, Inc. (GTLS - Free Report) manufactures and sells engineered equipment for the energy and industrial gas industries. The company’s expected earnings growth rate for the current year is 25% against the Zacks Manufacturing - General Industrial industry’s estimated earnings decline of 22.2%. The Zacks Consensus Estimate for its current-year earnings has climbed 27% over the past 60 days.

Lakeland Industries, Inc. (LAKE - Free Report) manufactures and sells industrial protective clothing and accessories for the industrial and public protective clothing market. The company’s expected earnings growth rate for the current year is more than 100% against the Zacks Security and Safety Services industry’s estimated earnings decline of 5%. The Zacks Consensus Estimate for its current-year earnings has climbed more than 100% over the past 60 days.

Tennant Company (TNC - Free Report) designs, manufactures, and markets floor cleaning equipment. The company’s expected earnings growth rate for the next quarter is 31.3% against the Zacks Manufacturing - General Industrial industry’s estimated earnings decline of 28.3%. The Zacks Consensus Estimate for its current-year earnings has climbed 4.1% over the past 60 days.

II-VI Incorporated (IIVI - Free Report) develops, manufactures, and markets engineered materials, and optoelectronic components and devices. The company’s expected earnings growth rate for the current quarter is 13.4% against the Zacks Manufacturing - Electronics industry’s estimated earnings decline of 28.2%. The Zacks Consensus Estimate for its current-year earnings has climbed 10.7% over the past 60 days.

SiteOne Landscape Supply, Inc. (SITE - Free Report) engages in the wholesale distribution of landscape supplies like controllers, valves, sprinkler heads, and irrigation and drainage pipes and more. The company’s expected earnings growth rate for the current quarter is 1.2% against the Zacks Industrial Services industry’s estimated earnings decline of 94.6%. The Zacks Consensus Estimate for its current-year earnings has climbed 29.6% over the past 60 days.

Biggest Tech Breakthrough in a Generation

Be among the early investors in the new type of device that experts say could impact society as much as the discovery of electricity. Current technology will soon be outdated and replaced by these new devices. In the process, it’s expected to create 22 million jobs and generate $12.3 trillion in activity.

A select few stocks could skyrocket the most as rollout accelerates for this new tech. Early investors could see gains similar to buying Microsoft in the 1990s. Zacks’ just-released special report reveals 8 stocks to watch. The report is only available for a limited time.

See 8 breakthrough stocks now>>

Published in