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4 Solid Stocks to Buy as Durable Goods Orders Continue to Rise

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Orders for long-lasting U.S. factory-made goods continue to rise despite soaring prices of consumer goods. People have been compelled to cut down on spending but solid demand has been driving orders for consumer durable goods. This saw orders for U.S -made durable goods jump more than double the expectations in October.

Inflationary pressures are taking a toll on the manufacturing sector, but higher orders for transportation equipment have been aiding. Even then, overall demand for consumer goods has been impressive lately.

Given this scenario, stocks like Hubbell Incorporated (HUBB - Free Report) ,Applied Industrial Technologies, Inc. (AIT - Free Report) , IDEX Corporation (IEX - Free Report) and Manitex International, Inc. (MNTX - Free Report) are expected to gain in the near term.

Durable Goods Orders Grow Amid Rising Costs

The Commerce Department reported on Nov 23 that orders for durable goods in U.S. factories rose 1% or $2.8 billion to $277.4 billion in October, beating expectations by more than double. Economists had expected orders for consumer goods to rise 0.4%. October’s solid jump comes after a 0.3% rise in orders for durable goods in September.

Excluding defense, new orders for durable goods rose 0.8% in October.

October’s jump can be attributed to an impressive rise in orders for transportation equipment by $2 billion, or 2.1%, to $97.8 billion. Orders for transportation equipment have now increased in six of the past seven months. Excluding transportation, new orders increased 0.5% in October.  

The manufacturing industry has been facing a tough time as a result of consumers' cautious purchasing and cost-cutting measures. Despite the difficulties, the sector has been trying to hold its ground. Overall strong demand is driving orders, which is eventually pushing sales higher.

Shipments of manufactured durable goods rose 0.4% in October after a 0.3% rise in the month earlier. Machinery shipments led the gains, rising 1.3%. Shipments of capital goods have now increased for 17 of the last 18 months. Core capital goods shipments, a metric to gauge equipment investment in the government’s GDP report, increased 1.3%.

Also, inventories of manufactured durable goods in October jumped $0.9 billion or 0.2% to $489.5 billion from the previous month.

People spent more on goods and less on services during the peak of the pandemic, but now that the economy is once again operating at its optimum level, people have started spending more on services. Even then, there is still a sizable amount of product demand, which is driving up orders for durable goods.

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 four 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.

Hubbell Incorporated is engaged in the design, manufacture and sale of electrical and electronic products to commercial, industrial, utility and telecommunications markets. HUBB’s products include plugs, receptacles, connectors, lighting fixtures, high-voltage test and measurement equipment, and voice and data signal processing components.

Hubbell Incorporated’s expected earnings growth for the current year is 29.3%. The Zacks Consensus Estimate for current-year earnings has improved 6.1% over the past 60 days. HUBB at present sports a Zacks Rank #1.

Applied Industrial Technologies, Inc. is a distributor of value-added industrial products — including engineered fluid power components, bearings, specialty flow control solutions, power transmission products and miscellaneous industrial supplies. AIT’s products are mainly sold to original equipment manufacturers and maintenance, repair, and operations customers in Australia, North America, Singapore and New Zealand.

Applied Industrial Technologies’ expected earnings growth for the current year is 14.3%. The Zacks Consensus Estimate for current-year earnings has improved 3% over the past 60 days. AIT currently has a Zacks Rank #2.

IDEX Corporation is an applied solutions company that specializes in a diverse range of applications such as fluid and metering technologies; health and science technologies; and fire, safety and other products built to customer specifications. IEX sells its products to original equipment manufacturers, as well as to direct end-use customers across the globe.

IDEX Corporation’s expected earnings growth for the current year is 28.3%. The Zacks Consensus Estimate for current-year earnings has improved 1.8% over the past 60 days. IEX currently has a Zacks Rank #2.

Manitex International, Inc. is a leading provider of engineered lifting solutions including boom trucks, cranes, rough terrain forklifts, and special mission-oriented vehicles. MNTX, through its subsidiaries, manufactures and markets a comprehensive line of boom trucks and sign cranes.

Manitex International’s expected earnings growth for the current year is more than 100%. The Zacks Consensus Estimate for current-year earnings has improved more than 100% over the past 60 days. MNTX presently carries a Zacks Rank #1.

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