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U.S. Durable Goods Orders Jump in March: 5 Stocks to Buy

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New orders for long-lasting durable goods rebounded in March after a decline in the prior month. Government aid and improving public health helped boost demand for durable goods. February was one of the rare months in more than a year when orders for durable goods had declined.

This once again proves that the nation is on track for a steady economic recovery. Also, shipment of manufactured goods increased to a large extent in March. The jump comes on the back of impressive data on retail sales.

Durable Goods Orders Rebound

The Commerce Department said on Apr 26 that new orders for durable goods rose 0.5% to a seasonally adjusted $256.3 billion in March on a month-over-month basis. Orders for U.S.-made capital goods have now increased in 10 out of the last 11 months.

Last month saw new orders for durable goods declining as a result of the ongoing supply chain challenge for U.S. factories. On a year-over-year basis, new orders for core capital goods jumped 10.4% in March.

The increase in March was driven by higher demand for machinery, primary and fabricated metal products and computers and other electronic goods.

Orders for Core Capital Goods Increase

One of the impressive points of the Commerce Department’s report was that orders for non-defense capital goods excluding aircraft increased 0.9% in March after declining 0.8% in February. Shipments of core capital goods also rose 1.3% in March after declining 1.1% in February.

Orders for motor vehicles and parts rose 5.5% in March after a sharp decline of 9.1% in February. 

Investment in equipment had jumped last year, which is one reason why the pace for new orders has been continuing into this year, with pent-up demand despite low inventories at businesses. Moreover, the second round of stimulus and the rising number of COVID-19 vaccinations have seen people gain confidence, leading them to spend more.

Understandably, people are more confident about the economy now and despite hindrances in the supply chain for factories, orders have been on the rise. Moreover, economists are also hopeful about the upcoming report on first-quarter GDP to alter this week, showing an impressive jump. 

Our Choices

Given this scenario, it will be prudent to invest in stocks with a favorable Zacks Rank that are poised to gain from solid durable goods orders. We narrowed down our search to five such stocks. Each of these stocks carries either a Zacks Rank #1 (Strong Buy) or 2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Kulicke and Soffa Industries, Inc. (KLIC - Free Report) is a leading provider of semiconductor packaging and electronic assembly solutions supporting the global automotive, consumer, communications, computing and industrial segments.

The company’s expected earnings growth rate for the current year is more than 100%. The Zacks Consensus Estimate for current-year earnings has improved 30.8% over the past 60 days. The company sports a Zacks Rank #1.

Dover Corporation (DOV - Free Report) is an industrial conglomerate producing a wide range of specialized industrial products and manufacturing equipment.

The company’s expected earnings growth rate for the current year is 21.9%. The Zacks Consensus Estimate for current-year earnings has improved 7.1% over the past 60 days. The company sports a Zacks Rank #1.

AZZ Inc. (AZZ - Free Report) is a global provider of metal coating services, welding solutions, specialty electrical equipment and highly engineered services to the markets of power generation, transmission, distribution and industrial in protecting metal and electrical systems used to build and enhance the world's infrastructure.

The company’s expected earnings growth rate for the current year is 32.7%. The Zacks Consensus Estimate for current-year earnings has improved 5.7% over the past 60 days. The company has a Zacks Rank #2.

Graco Inc. (GGG - Free Report) manufactures, designs and sells equipment and systems used to measure, move, control, spray and dispense fluid as well as powder materials. 

The company’s expected earnings growth rate for the current year is 27.2%. The Zacks Consensus Estimate for current-year earnings has improved 6% over the past 60 days. The company has a Zacks Rank #2.

Deere & Company (DE - Free Report) is the world’s largest producer of agricultural equipment, manufacturing agricultural machinery since 1837 under the iconic John Deere brand with its signature green and yellow color scheme. 

The company’s expected earnings growth rate for the current year is 83.9%. The Zacks Consensus Estimate for current-year earnings has improved 2.9% over the past 60 days. The company has a Zacks Rank #2.

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