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4 Manufacturing Stocks to Buy as the Sector Rebounds
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The manufacturing sector in the United States has been badly hit by the Federal Reserve’s tight monetary policy regime, starting mid-2022. February marked the 16th straight month of the manufacturing PMI remaining under 50. This indicates a contraction in manufacturing. The sector has been constrained by higher borrowing costs. This run was the longest since the period from August 2000 to January 2002.
However, the Institute for Supply Management (“ISM”) said on Monday that the manufacturing PMI came in at 50.3 for March against a consensus of 48.6, increasing significantly from the February number, which was unrevised at 47.8. It is now finally in the expansion zone.
New orders sub-index increased to 51.4 in March from 49.2 in February. Factory output also rebounded big time, with the production sub-index surging to 54.6 from 48.4 in the month prior. There were no visible signs of supply chain issues arising from attacks on international shipping in the Red Sea by Houthi militants. Supplier deliveries for March came in at 49.9, down from 50.1 in February. A reading below 50 indicates faster deliveries.
With the Fed holding on to the current levels of interest rate over a period of time despite inflation metrics resuming their climb northward, the manufacturing sector might well be on a much-awaited path of recovery in the United States. Market participants are currently expecting the first rate cut to be announced in June and at least three cuts in 2024. A decline in borrowing costs over time would entail further capital spending, which would boost the sector.
Thus, we have selected four manufacturing stocks that are likely to be gaining ground in the ensuing months and should be looked into now. The stocks below flaunt a Zacks Rank #1 (Strong Buy) or 2 (Buy). The search was also narrowed down with a VGM Score of A or B. Here V stands for Value, G for Growth and M for Momentum; the score is a weighted combination of these three metrics. Such a score allows you to eliminate the negative aspects of stocks and select winners.
Xerox Holdings Corporation (XRX - Free Report) is a workplace technology company that provides print and digital document products and services globally.
Xerox’s expected earnings growth rate for the current year is 24.7%. The Zacks Consensus Estimate for its current-year earnings has improved 10.2% over the past 60 days. The company has a Zacks Rank #1 and a VGM Score of B. You can see the complete list of today’s Zacks #1 Rank stocks here.
H&E Equipment Services, Inc. (HEES - Free Report) is an integrated equipment services company focused on heavy construction and industrial equipment.
H&E Equipment’s expected earnings growth rate for the current year is 5%. The Zacks Consensus Estimate for its current-year earnings has improved 3.1% over the past 60 days. The company has a Zacks Rank #1 and a VGM Score of A.
Kaiser Aluminum Corporation (KALU - Free Report) is a global manufacturer and seller of semi-fabricated specialty aluminum mill products.
Kaiser Aluminum’s expected earnings growth rate for the current year is 31%. The Zacks Consensus Estimate for its current-year earnings has improved 20.9% over the past 60 days. The company has a Zacks Rank #1 and a VGM Score of A.
Crane Company (CR - Free Report) is a company that engages in the business of manufacturing and selling engineered industrial products.
Crane’s expected earnings growth rate for the current year is 11.9%. The Zacks Consensus Estimate for its current-year earnings has improved 2.8% over the past 60 days. The company has a Zacks Rank #2 and a VGM Score of A.
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4 Manufacturing Stocks to Buy as the Sector Rebounds
The manufacturing sector in the United States has been badly hit by the Federal Reserve’s tight monetary policy regime, starting mid-2022. February marked the 16th straight month of the manufacturing PMI remaining under 50. This indicates a contraction in manufacturing. The sector has been constrained by higher borrowing costs. This run was the longest since the period from August 2000 to January 2002.
However, the Institute for Supply Management (“ISM”) said on Monday that the manufacturing PMI came in at 50.3 for March against a consensus of 48.6, increasing significantly from the February number, which was unrevised at 47.8. It is now finally in the expansion zone.
New orders sub-index increased to 51.4 in March from 49.2 in February. Factory output also rebounded big time, with the production sub-index surging to 54.6 from 48.4 in the month prior. There were no visible signs of supply chain issues arising from attacks on international shipping in the Red Sea by Houthi militants. Supplier deliveries for March came in at 49.9, down from 50.1 in February. A reading below 50 indicates faster deliveries.
With the Fed holding on to the current levels of interest rate over a period of time despite inflation metrics resuming their climb northward, the manufacturing sector might well be on a much-awaited path of recovery in the United States. Market participants are currently expecting the first rate cut to be announced in June and at least three cuts in 2024. A decline in borrowing costs over time would entail further capital spending, which would boost the sector.
Thus, we have selected four manufacturing stocks that are likely to be gaining ground in the ensuing months and should be looked into now. The stocks below flaunt a Zacks Rank #1 (Strong Buy) or 2 (Buy). The search was also narrowed down with a VGM Score of A or B. Here V stands for Value, G for Growth and M for Momentum; the score is a weighted combination of these three metrics. Such a score allows you to eliminate the negative aspects of stocks and select winners.
Xerox Holdings Corporation (XRX - Free Report) is a workplace technology company that provides print and digital document products and services globally.
Xerox’s expected earnings growth rate for the current year is 24.7%. The Zacks Consensus Estimate for its current-year earnings has improved 10.2% over the past 60 days. The company has a Zacks Rank #1 and a VGM Score of B. You can see the complete list of today’s Zacks #1 Rank stocks here.
H&E Equipment Services, Inc. (HEES - Free Report) is an integrated equipment services company focused on heavy construction and industrial equipment.
H&E Equipment’s expected earnings growth rate for the current year is 5%. The Zacks Consensus Estimate for its current-year earnings has improved 3.1% over the past 60 days. The company has a Zacks Rank #1 and a VGM Score of A.
Kaiser Aluminum Corporation (KALU - Free Report) is a global manufacturer and seller of semi-fabricated specialty aluminum mill products.
Kaiser Aluminum’s expected earnings growth rate for the current year is 31%. The Zacks Consensus Estimate for its current-year earnings has improved 20.9% over the past 60 days. The company has a Zacks Rank #1 and a VGM Score of A.
Crane Company (CR - Free Report) is a company that engages in the business of manufacturing and selling engineered industrial products.
Crane’s expected earnings growth rate for the current year is 11.9%. The Zacks Consensus Estimate for its current-year earnings has improved 2.8% over the past 60 days. The company has a Zacks Rank #2 and a VGM Score of A.