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4 Top Stocks in Focus on Healthy Industrial Production Data
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The U.S industrial production continued its positive trajectory and gained momentum in July. Per the latest report published by the Federal Reserve on Aug 17, industrial production improved a seasonally adjusted 0.9% in July 2021, following growth of 0.2% and 0.8% in June and May, respectively. On a year-over-year basis, the metric recorded growth of 6.6% in the month.
The manufacturing sector recovered, with output rising a seasonally adjusted 1.4% in July. Gains of about 1.5% were registered in electrical equipment, machinery, appliances and components, miscellaneous manufacturing and aerospace & miscellaneous transportation equipment. Also, on a year-over-year basis, overall manufacturing output increased 7.4% in the month. Output in the mining sector recorded an increase of 12.1% in July in contrast to a decline of 3.8% in utilities output.
With the rollout of coronavirus vaccines and reopening of major global economies, businesses from the industrial sector are expected to benefit from growth in manufacturing activities. Growth in production across manufacturing industries, driven by improvement in domestic and international orders for industrial products and high backlog level, is likely to continue benefiting the sector. The sector is also witnessing growth in the e-commerce business amid the coronavirus pandemic, which has opened up opportunities for companies. However, supply chain issues, high raw material costs and labor constraints might be concerning.
Our Top Picks
Amid such a scenario, we suggest considering four industrial stocks from different industries under the ambit of the Zacks Industrial Products sector that have the potential for strong growth. Each of these stocks carries a Zacks Rank #1 (Strong Buy) or 2 (Buy) and are well positioned to capitalize on the opportunities in the sector. You can see the complete list of today’s Zacks #1 Rank stocks here.
Deere & Company (DE - Free Report) : The Moline, IL-based company is currently the world’s largest producer of agricultural equipment. Over the past year, shares of the Zacks Rank #2 company have rallied 96% compared with the Zacks Manufacturing - Farm Equipment industry’s rise of 92.5%. The Zacks Consensus Estimate for fiscal 2021 (ending October 2021) earnings has been revised 1.8% upward over the past 60 days, and the same for fiscal 2022 (ending October 2022) has been raised 3.3%.
Image Source: Zacks Investment Research
Deere is well poised to benefit from increase in demand for its products across agricultural and construction sectors and acquired assets. Also, focus on investing in new products and efforts to expand in precision agriculture will drive growth in the long haul.
Eaton Corporation plc (ETN - Free Report) : Headquartered in Dublin, Ireland, Eaton is a diversified power management company, and a global technology leader in electrical components and systems. Shares of the Zacks Rank #2 company have rallied 66.1% compared with the Zacks Manufacturing - Electronics industry’s rise of 47.6%. The Zacks Consensus Estimate for its 2021 earnings has been revised 9.1% upward over the past 60 days, and the same for 2022 earnings has been increased 8.4%.
Image Source: Zacks Investment Research
The company is likely to benefit from its diversified product portfolio with a strong market presence, acquisitions and research and development programs. Also, the company’s ability to generate strong cash flow supports its shareholder-friendly moves.
Dover Corporation (DOV - Free Report) : Based in New York, Dover is a leading provider of a wide range of specialized industrial products and manufacturing equipment. Shares of the Zacks Rank #2 company have rallied 56.3% compared with the Zacks Manufacturing - General Industrial industry’s rise of 26.1%. The Zacks Consensus Estimate for its current-year earnings has been revised 7.7% upward over the past 60 days, and the same for 2022 earnings has been hiked 7.1%.
Image Source: Zacks Investment Research
It is well-poised to benefit from the strong end-market demand, solid bookings rates and robust backlog. Strong growth in demand for pumps and process solutions, fueling solutions, food retail, marking & coding and automotive aftermarket businesses bodes well. Its focus on product development and cost management actions, acquisitions, and inorganic investment in core business platforms will also drive growth.
Kadant Inc. (KAI - Free Report) : Based in Westford, MA, Kadant is a leading supplier of high-value, critical components and engineered systems for the global papermaking and paper-recycling industries. Over the past year, the Zacks Rank #1 stock has rallied 69.2% compared with the Zacks Manufacturing - General Industrial industry’s growth of 26.1%. In the past 60 days, the Zacks Consensus Estimate for its 2021 earnings has been raised 20.8% upward, and the same for 2022 has been increased 28.5%.
Image Source: Zacks Investment Research
It stands to benefit from improving demand environment in end markets, strong backlog level and acquired assets in the quarters ahead. Also, its focus on operational effectiveness and solid liquidity position bode well.
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4 Top Stocks in Focus on Healthy Industrial Production Data
The U.S industrial production continued its positive trajectory and gained momentum in July. Per the latest report published by the Federal Reserve on Aug 17, industrial production improved a seasonally adjusted 0.9% in July 2021, following growth of 0.2% and 0.8% in June and May, respectively. On a year-over-year basis, the metric recorded growth of 6.6% in the month.
The manufacturing sector recovered, with output rising a seasonally adjusted 1.4% in July. Gains of about 1.5% were registered in electrical equipment, machinery, appliances and components, miscellaneous manufacturing and aerospace & miscellaneous transportation equipment. Also, on a year-over-year basis, overall manufacturing output increased 7.4% in the month. Output in the mining sector recorded an increase of 12.1% in July in contrast to a decline of 3.8% in utilities output.
With the rollout of coronavirus vaccines and reopening of major global economies, businesses from the industrial sector are expected to benefit from growth in manufacturing activities. Growth in production across manufacturing industries, driven by improvement in domestic and international orders for industrial products and high backlog level, is likely to continue benefiting the sector. The sector is also witnessing growth in the e-commerce business amid the coronavirus pandemic, which has opened up opportunities for companies. However, supply chain issues, high raw material costs and labor constraints might be concerning.
Our Top Picks
Amid such a scenario, we suggest considering four industrial stocks from different industries under the ambit of the Zacks Industrial Products sector that have the potential for strong growth. Each of these stocks carries a Zacks Rank #1 (Strong Buy) or 2 (Buy) and are well positioned to capitalize on the opportunities in the sector. You can see the complete list of today’s Zacks #1 Rank stocks here.
Deere & Company (DE - Free Report) : The Moline, IL-based company is currently the world’s largest producer of agricultural equipment. Over the past year, shares of the Zacks Rank #2 company have rallied 96% compared with the Zacks Manufacturing - Farm Equipment industry’s rise of 92.5%. The Zacks Consensus Estimate for fiscal 2021 (ending October 2021) earnings has been revised 1.8% upward over the past 60 days, and the same for fiscal 2022 (ending October 2022) has been raised 3.3%.
Image Source: Zacks Investment Research
Deere is well poised to benefit from increase in demand for its products across agricultural and construction sectors and acquired assets. Also, focus on investing in new products and efforts to expand in precision agriculture will drive growth in the long haul.
Eaton Corporation plc (ETN - Free Report) : Headquartered in Dublin, Ireland, Eaton is a diversified power management company, and a global technology leader in electrical components and systems. Shares of the Zacks Rank #2 company have rallied 66.1% compared with the Zacks Manufacturing - Electronics industry’s rise of 47.6%. The Zacks Consensus Estimate for its 2021 earnings has been revised 9.1% upward over the past 60 days, and the same for 2022 earnings has been increased 8.4%.
Image Source: Zacks Investment Research
The company is likely to benefit from its diversified product portfolio with a strong market presence, acquisitions and research and development programs. Also, the company’s ability to generate strong cash flow supports its shareholder-friendly moves.
Dover Corporation (DOV - Free Report) : Based in New York, Dover is a leading provider of a wide range of specialized industrial products and manufacturing equipment. Shares of the Zacks Rank #2 company have rallied 56.3% compared with the Zacks Manufacturing - General Industrial industry’s rise of 26.1%. The Zacks Consensus Estimate for its current-year earnings has been revised 7.7% upward over the past 60 days, and the same for 2022 earnings has been hiked 7.1%.
Image Source: Zacks Investment Research
It is well-poised to benefit from the strong end-market demand, solid bookings rates and robust backlog. Strong growth in demand for pumps and process solutions, fueling solutions, food retail, marking & coding and automotive aftermarket businesses bodes well. Its focus on product development and cost management actions, acquisitions, and inorganic investment in core business platforms will also drive growth.
Kadant Inc. (KAI - Free Report) : Based in Westford, MA, Kadant is a leading supplier of high-value, critical components and engineered systems for the global papermaking and paper-recycling industries. Over the past year, the Zacks Rank #1 stock has rallied 69.2% compared with the Zacks Manufacturing - General Industrial industry’s growth of 26.1%. In the past 60 days, the Zacks Consensus Estimate for its 2021 earnings has been raised 20.8% upward, and the same for 2022 has been increased 28.5%.
Image Source: Zacks Investment Research
It stands to benefit from improving demand environment in end markets, strong backlog level and acquired assets in the quarters ahead. Also, its focus on operational effectiveness and solid liquidity position bode well.