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5 Must-Buy Stocks as December Industrial Production Edges Up
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Industrial production increased 0.1% in December, the Federal Reserve said on Jan 17. Although the jump was unexpected, as economists had forecast the reading to remain unchanged, it was notable.
The rise in December not only proves the underlying strength in the economy but also hints at a rebound being witnessed in manufacturing activity after months of struggle. Overall manufacturing activity also increased in December to close out a tough year.
However, the picture looks rosier now compared to last year as inflation continues to ease. December’s jump in factory output was driven by a rebound in the manufacturing and mining sectors.
Mining output increased 0.9% month over month in December, while manufacturing output rose 0.1%. Also, automobile production picked up in December as the United Auto Workers’ strike ended. Automobile production surged 1.6%, hinting at a solid rebound for the sector.
Capacity utilization, however, remained unchanged at 78.6% in December.
Multi-decade high inflation following the pandemic compelled the Federal Reserve to hike interest rates by 525 basis points since March 2022. Higher borrowing costs slowed demand, with the manufacturing sector suffering the most.
However, the Federal Reserve’s aggressive stance paid off, and inflation has since declined sharply from its 9.1% peak in June 2022. The Fed also left interest rates unchanged in its past three FOMC meetings.
Slowing inflation is finally seeing demand rebounding, which is aiding the manufacturing sector. The Institute for Supply Management’s manufacturing PMI jumped to 47.4 in December after remaining unchanged in the prior two months at 46.7.
Markets are now expecting at least three 25-basis-point rate cuts in 2024 after Federal Reserve Chairman Jerome Powell said at the end of the December policy meeting that the central bank is likely done with interest rate hikes. Lower interest rates will further boost demand and drive industrial production.
ATS Corporation provides automation solutions. ATS is also involved in planning, designing, building, commissioning and servicing automated manufacturing and assembly systems, including automation products and test solutions.
ATS Corporation’s expected earnings growth for the current year is 9.5%. The Zacks Consensus Estimate for current-year earnings has improved 1.6% over the past 60 days. ATS currently has a Zacks Rank #2.
Cintas Corporation provides specialized services to businesses of all types throughout North America. CTAS also operates in Europe, Asia and Latin America. Cintas Corporation designs, manufactures, implements corporate identity uniform programs, and provides entrance mats, restroom supplies, promotional products and first aid and safety products for diversified businesses.
Cintas Corporation’s expected earnings growth for the current year is 12.2%. The Zacks Consensus Estimate for current-year earnings has improved 1.6% over the past 60 days. CTAS presently carries a Zacks Rank #2.
Enerpac Tool Group Corp. is involved in the designing, manufacturing and distribution of various industrial tools, including high-pressure hydraulic tools and controlled force products. EPAC serves a vast client base in more than 100 countries. Enerpac Tool Grouphas presence in the United States, Europe, Asia, the Middle East and many other geographical locations.
Enerpac Tool Group’s expected earnings growth for the current year is 20.7%. The Zacks Consensus Estimate for current-year earnings has improved 2.3% over the past 60 days. EPAC presently has a Zacks Rank #2.
A. O. Smith Corporation is one of the leading manufacturers of commercial and residential water heating equipment and water treatment products in the world. AOS specializes in offering innovative and energy-efficient solutions and products, which are developed and sold on a global platform.
A. O. Smith’s expected earnings growth for the current year is 20.4%. The Zacks Consensus Estimate for current-year earnings has improved 0.3% over the last 60 days. AOS currently carries a Zacks Rank #2.
Lakeland Industries, Inc. has five divisions and three wholly-owned subsidiaries. One large division of LAKE manufactures disposable/limited-use garments and four smaller divisions are Chemland, which manufactures suits for toxic waste clean-up teams, Fireland Fyrepel Products, which manufactures fire and heat protective apparel and protective systems for personnel, Highland, which manufactures specialty safety and industrial work gloves and Uniland, which manufactures industrial and medical woven cloth garments.
Lakeland Industries’ expected earnings growth for the current year is 128%. The Zacks Consensus Estimate for current-year earnings has improved 8.6% over the last 60 days. LAKE currently sports a Zacks Rank #1.
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5 Must-Buy Stocks as December Industrial Production Edges Up
Industrial production increased 0.1% in December, the Federal Reserve said on Jan 17. Although the jump was unexpected, as economists had forecast the reading to remain unchanged, it was notable.
The rise in December not only proves the underlying strength in the economy but also hints at a rebound being witnessed in manufacturing activity after months of struggle. Overall manufacturing activity also increased in December to close out a tough year.
However, the picture looks rosier now compared to last year as inflation continues to ease. December’s jump in factory output was driven by a rebound in the manufacturing and mining sectors.
Mining output increased 0.9% month over month in December, while manufacturing output rose 0.1%. Also, automobile production picked up in December as the United Auto Workers’ strike ended. Automobile production surged 1.6%, hinting at a solid rebound for the sector.
Capacity utilization, however, remained unchanged at 78.6% in December.
Multi-decade high inflation following the pandemic compelled the Federal Reserve to hike interest rates by 525 basis points since March 2022. Higher borrowing costs slowed demand, with the manufacturing sector suffering the most.
However, the Federal Reserve’s aggressive stance paid off, and inflation has since declined sharply from its 9.1% peak in June 2022. The Fed also left interest rates unchanged in its past three FOMC meetings.
Slowing inflation is finally seeing demand rebounding, which is aiding the manufacturing sector. The Institute for Supply Management’s manufacturing PMI jumped to 47.4 in December after remaining unchanged in the prior two months at 46.7.
Markets are now expecting at least three 25-basis-point rate cuts in 2024 after Federal Reserve Chairman Jerome Powell said at the end of the December policy meeting that the central bank is likely done with interest rate hikes. Lower interest rates will further boost demand and drive industrial production.
Our Choices
Given this scenario, it would be ideal to invest in five stocks such as ATS Corporation (ATS - Free Report) , Cintas Corporation (CTAS - Free Report) , Enerpac Tool Group Corp. (EPAC - Free Report) , A. O. Smith Corporation (AOS - Free Report) and Lakeland Industries, Inc. (LAKE - Free Report) which we have detailed below. These stocks have a Zacks Rank #1 (Strong Buy) or 2 (Buy) and assure good returns. You can see the complete list of today’s Zacks #1 Rank stocks here.
ATS Corporation provides automation solutions. ATS is also involved in planning, designing, building, commissioning and servicing automated manufacturing and assembly systems, including automation products and test solutions.
ATS Corporation’s expected earnings growth for the current year is 9.5%. The Zacks Consensus Estimate for current-year earnings has improved 1.6% over the past 60 days. ATS currently has a Zacks Rank #2.
Cintas Corporation provides specialized services to businesses of all types throughout North America. CTAS also operates in Europe, Asia and Latin America. Cintas Corporation designs, manufactures, implements corporate identity uniform programs, and provides entrance mats, restroom supplies, promotional products and first aid and safety products for diversified businesses.
Cintas Corporation’s expected earnings growth for the current year is 12.2%. The Zacks Consensus Estimate for current-year earnings has improved 1.6% over the past 60 days. CTAS presently carries a Zacks Rank #2.
Enerpac Tool Group Corp. is involved in the designing, manufacturing and distribution of various industrial tools, including high-pressure hydraulic tools and controlled force products. EPAC serves a vast client base in more than 100 countries. Enerpac Tool Grouphas presence in the United States, Europe, Asia, the Middle East and many other geographical locations.
Enerpac Tool Group’s expected earnings growth for the current year is 20.7%. The Zacks Consensus Estimate for current-year earnings has improved 2.3% over the past 60 days. EPAC presently has a Zacks Rank #2.
A. O. Smith Corporation is one of the leading manufacturers of commercial and residential water heating equipment and water treatment products in the world. AOS specializes in offering innovative and energy-efficient solutions and products, which are developed and sold on a global platform.
A. O. Smith’s expected earnings growth for the current year is 20.4%. The Zacks Consensus Estimate for current-year earnings has improved 0.3% over the last 60 days. AOS currently carries a Zacks Rank #2.
Lakeland Industries, Inc. has five divisions and three wholly-owned subsidiaries. One large division of LAKE manufactures disposable/limited-use garments and four smaller divisions are Chemland, which manufactures suits for toxic waste clean-up teams, Fireland Fyrepel Products, which manufactures fire and heat protective apparel and protective systems for personnel, Highland, which manufactures specialty safety and industrial work gloves and Uniland, which manufactures industrial and medical woven cloth garments.
Lakeland Industries’ expected earnings growth for the current year is 128%. The Zacks Consensus Estimate for current-year earnings has improved 8.6% over the last 60 days. LAKE currently sports a Zacks Rank #1.