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Industrial Production Boosts Manufacturing Activity: 5 Picks
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The U.S. manufacturing sector is trying to make a solid rebound on higher demands which is driving production at factories. The rebound follows months of struggle for the manufacturing sector that saw demand slowing as higher borrowing rates weighed on the economy.
The Federal Reserve reported on Apr 16 that industrial production rose 0.4% in March, in line with the consensus estimate and the same as in February. Manufacturing output increased 0.5% in March. February’s numbers were revised 1.2% upward from the initially reported 0.8% increase.
Year over year, production at U.S. factories jumped 0.8% in March. The jump in March can be attributed to a solid rise in the output of motor vehicles and parts which increased 3.1% after rising 3.4% in February. Factory output for durable goods increased 0.3%. Production of non-durable goods jumped 0.7%
Manufacturing accounts for 10.4% of the economy. Manufacturing activity is finally showing signs of a turnaround. The Federal Reserve adopted a strict monetary tightening campaign to combat 40-year-high inflation that saw it hiking interest rates by a whopping 525 basis points to take its benchmark policy rate in the current range of 5.25-5.5%.
This saw inflation decline sharply, but higher borrowing costs started slowing demand and orders dried up. The Federal Reserve has left interest rates unchanged since July 2023.
Easing price pressure is once again boosting orders, which is driving manufacturing activity. Earlier this month, the Commerce Department reported that new orders for U.S.-made manufactured goods rose 1.4% in February.
Also, the Institute for Supply Management’s (ISM) survey showed that its manufacturing PMI jumped to 50.3 in March, the first and highest reading above 50 since September 2022.
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 7.2%. The Zacks Consensus Estimate for current-year earnings has improved 0.2% over the past 60 days. HUBB currently carries 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 7.6%. The Zacks Consensus Estimate for current-year earnings has improved 1.2% over the last 60 days. AOS currently carries a Zacks Rank #2.
AZZ Inc. is a global provider of metal coating services, welding solutions, specialty electrical equipment and highly engineered services to the markets of power generation, transmission, distribution and industrial in protecting metal and electrical systems used to build and enhance the world's infrastructure.
AZZ Inc.’s expected earnings growth for the current year is 23.9%. The Zacks Consensus Estimate for current-year earnings has improved 0.2% over the past 60 days. AZZ, 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 8.5%. The Zacks Consensus Estimate for current-year earnings has improved 1% over the past 60 days. AIT currently sports a Zacks Rank #1.
Luxfer Holdings PLC is a materials technology company specializing in the design, manufacture and supply of high-performance materials, components and gas cylinders. LXFR has two divisions, Elektron and Gas Cylinders.
Luxfer Holdings PLC’s expected earnings growth for the current year is 21.3%. The Zacks Consensus Estimate for current-year earnings has improved 111.4% over the past 60 days. LXFR currently has a Zacks Rank #2.
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Industrial Production Boosts Manufacturing Activity: 5 Picks
The U.S. manufacturing sector is trying to make a solid rebound on higher demands which is driving production at factories. The rebound follows months of struggle for the manufacturing sector that saw demand slowing as higher borrowing rates weighed on the economy.
The Federal Reserve reported on Apr 16 that industrial production rose 0.4% in March, in line with the consensus estimate and the same as in February. Manufacturing output increased 0.5% in March. February’s numbers were revised 1.2% upward from the initially reported 0.8% increase.
Year over year, production at U.S. factories jumped 0.8% in March. The jump in March can be attributed to a solid rise in the output of motor vehicles and parts which increased 3.1% after rising 3.4% in February. Factory output for durable goods increased 0.3%. Production of non-durable goods jumped 0.7%
Manufacturing accounts for 10.4% of the economy. Manufacturing activity is finally showing signs of a turnaround. The Federal Reserve adopted a strict monetary tightening campaign to combat 40-year-high inflation that saw it hiking interest rates by a whopping 525 basis points to take its benchmark policy rate in the current range of 5.25-5.5%.
This saw inflation decline sharply, but higher borrowing costs started slowing demand and orders dried up. The Federal Reserve has left interest rates unchanged since July 2023.
Easing price pressure is once again boosting orders, which is driving manufacturing activity. Earlier this month, the Commerce Department reported that new orders for U.S.-made manufactured goods rose 1.4% in February.
Also, the Institute for Supply Management’s (ISM) survey showed that its manufacturing PMI jumped to 50.3 in March, the first and highest reading above 50 since September 2022.
Our Choices
Given this scenario, it would be ideal to invest in five stocks from the manufacturing sector — Hubbell Incorporated (HUBB - Free Report) , A. O. Smith Corporation (AOS - Free Report) , AZZ Inc. (AZZ - Free Report) , Applied Industrial Technologies, Inc. (AIT - Free Report) and Luxfer Holdings PLC (LXFR - Free Report) — that 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.
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 7.2%. The Zacks Consensus Estimate for current-year earnings has improved 0.2% over the past 60 days. HUBB currently carries 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 7.6%. The Zacks Consensus Estimate for current-year earnings has improved 1.2% over the last 60 days. AOS currently carries a Zacks Rank #2.
AZZ Inc. is a global provider of metal coating services, welding solutions, specialty electrical equipment and highly engineered services to the markets of power generation, transmission, distribution and industrial in protecting metal and electrical systems used to build and enhance the world's infrastructure.
AZZ Inc.’s expected earnings growth for the current year is 23.9%. The Zacks Consensus Estimate for current-year earnings has improved 0.2% over the past 60 days. AZZ, 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 8.5%. The Zacks Consensus Estimate for current-year earnings has improved 1% over the past 60 days. AIT currently sports a Zacks Rank #1.
Luxfer Holdings PLC is a materials technology company specializing in the design, manufacture and supply of high-performance materials, components and gas cylinders. LXFR has two divisions, Elektron and Gas Cylinders.
Luxfer Holdings PLC’s expected earnings growth for the current year is 21.3%. The Zacks Consensus Estimate for current-year earnings has improved 111.4% over the past 60 days. LXFR currently has a Zacks Rank #2.