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5 Stocks to Gain From Continued Uptick in Factory Orders

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Factory orders in the United States continued to improve in June, highlighting the sustained expansion in manufacturing activity. Per a Reuters article, citing the Commerce Department, factory orders increased 1.5% in June, following a rise of 2.3% in May, even as spending shifted to services from goods as the U.S. economy gradually reopened. In fact, per a MarketWatch article, citing the Commerce Department, new orders have increased in 13 of the previous 14 months.

The MarketWatch article further stated that the previous estimate of durable goods orders for June was revised upward, rising 0.9%, compared to the previously estimated rise of 0.8%. The article also stated that orders for nondefense capital goods, that is, excluding aircraft and military, which is seen as a way of understanding equipment spending plans, were revised upward and rose 0.7% in June, compared to the prior estimate of 0.5% gain. Nondurable goods orders also witnessed an uptick, cited the MarketWatch article, as it rose 2.1% in June.

A separate Reuters article stated that the increase in factory orders in June was broad, with gains being reported in machinery, computers and electronic products, and electrical equipment, among others. On a further positive note, the U.S. economy expanded in the second quarter of 2021, continuing its recovery from the pandemic-induced slump witnessed in the first half of last year. The Reuters article stated, citing the Bureau of Economic Analysis that GDP expanded at an annual rate of 6.5% during the second quarter, compared to a revised increase of 6.3% in the first quarter. Adding to the positives, the second-quarter reading was above the pre-pandemic fourth-quarter GDP of 2019, mentioned in the Reuters article.

In fact, the U.S. Federal Reserve expects the growth momentum to continue as in its monetary policy statement released on Jun 16, the Fed estimated real GDP to rise 7% in 2021. Besides that, the U.S. Senate is also working on a bipartisan infrastructure bill which is set to include $550 billion in additional spending. Americans have also been feeling confident about the state of the economy despite concerns surrounding the Delta variant of coronavirus. A separate MarketWatch article, citing the Conference Board, reported that the index of consumer confidence rose to 129.1 in July, compared to the revised reading of 128.9 in June, marking the highest level since February 2020.

5 Stocks to Buy Now

Orders for U.S.-manufactured goods increased in June amid economic recovery. The proposed infrastructure bill, by the way, is expected to provide a further boost to the economy. This makes it an exciting opportunity to invest in stocks with strong fundamentals that stand to benefit from the rising orders. We have handpicked five such stocks that carry a Zacks Rank #1 (Strong Buy) or 2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Schnitzer Steel Industries, Inc. (SCHN - Free Report) recycles ferrous and nonferrous scrap metals; and manufactures finished steel products worldwide. The company reported its fiscal third-quarter 2021 earnings on Jun 30 and stated that its performance during the quarter benefited from the robust global demand for recycled metals and for finished steel products on the West Coast.

This Zacks Rank #1 company has gained 63.2% year to date. The Zacks Consensus Estimate for its current-year earnings increased 8.8% over the past 60 days. The company’s expected earnings growth rate for the current year is more than 100%.

AZZ Inc. (AZZ - Free Report) provides galvanizing and metal coating solutions, welding solutions, specialty electrical equipment, and so on to the transmission, distribution, industrial markets, among others, in the United States and internationally. On Jan 4, AZZ announced the acquisition of all the assets of Acme Galvanizing, Inc. which was a privately held hot-dip galvanizing and zinc electroplating company.

Shares of AZZ have risen 11.2% year to date and it currently flaunts a Zacks Rank #1. The Zacks Consensus Estimate for its current-year earnings increased 13% over the past 60 days. The company’s expected earnings growth rate for the current year is 44.1%.

Deere & Company (DE - Free Report) , together with its subsidiaries, manufactures and distributes agricultural, construction, and forestry machinery, diesel engines, drivetrains used in heavy equipment, and lawn care equipment. On May 21, the company raised its forecast for industry sales of large equipment in the United States and Canada to 25% for this year, compared to 15% to 20% previously estimated, as cited in another Reuters article.

Shares of Deere & Co have gained nearly 36% year to date. The Zacks Consensus Estimate for its current-year earnings increased 1.6% over the past 60 days. The expected earnings growth rate for this Zacks Rank #2 company for the current year is more than 100%.

J & J Snack Foods Corp. (JJSF - Free Report) manufactures, markets, and distributes various nutritional snack foods and beverages to the food service and retail supermarket industries. On Jul 26, the company reported its fiscal third-quarter 2021 earnings for the quarter ended Jun 26 and stated that its Food Service segment made a comeback during the quarter and rose 68% year over year as people started getting out of their houses.

Shares of this Zacks Rank #2 company have gained 5.8% year to date. The Zacks Consensus Estimate for its current-year earnings increased 23.6% over the past 60 days. The company’s expected earnings growth rate for the current year is more than 100%.

Bassett Furniture Industries, Incorporated (BSET - Free Report) engages in the design, manufacture, sourcing, sale, and distribution of furniture products.

Shares of Bassett Furniture have gained 10.8% year to date and the company currently has a Zacks Rank #2. The Zacks Consensus Estimate for its current-year earnings increased 19.2% over the past 60 days. The company’s expected earnings growth rate for the current year is more than 100%.