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4 Industrial Stocks to Buy on Steady Rebound in Manufacturing Activity
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Key Takeaways
ISM Manufacturing PMI jumped to 52.6 in January, marking the sector's first expansion in 12 months.
New Orders surged to 57.1% and Production rose to 55.9%, both the strongest readings since February 2022.
ATS, NDSN, DCI and RBC post double-digit earnings growth expectations with consensus estimates moving higher.
The U.S. manufacturing sector is finally showing signs of recovery after struggling for over three years. The Institute of Supply Management (ISM) Manufacturing Purchasing Managers Index (PMI) jumped more than expected in January, indicating a steady recovery that started last year.
Although high prices continue to pose a major challenge for the economy, the burden has eased over the past year, which has seen a surge in demand.
The ISM Manufacturing PMI unexpectedly jumped to 52.6 in January from 47.9 in the previous month and surpassed analysts’ expectations of a rise to 48.5. This is the highest reading since 2022 as the sector expanded for the first time in 12 months.
Any reading above 47.5% over a prolonged period indicates an expansion of the overall economy. January’s jump was driven by a surge in new orders for manufactured goods. The New Orders Index rose 9.7% to 57.1% from December’s rise of 47.4%, and was the highest level since February 2022. This was also the first time the index gained since August 2025.
The Production Index climbed to 55.9%, a 5.2% rise from December’s seasonally adjusted figure of 50.7% and the highest level since February 2022.
Inflation has eased over the past two quarters, and the Federal Reserve cut interest rates by 75 basis points last year, which has somewhat eased borrowing costs and price pressures, thus driving demand.
The Federal Reserve held interest rates steady in its current range of 3.5% to 3.75% at the January meeting. However, the central bank said that it is open to more rate cuts depending on how inflation eases. Earlier, the Fed said that it is hopeful about inflation slowing down to 2.4% by the end of 2026 and economic growth accelerating to 2.3% this year.
4 Industrial Products Stocks With Upside
ATS Corporation
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 18.9%. The Zacks Consensus Estimate for current-year earnings has improved 0.8% over the past 60 days.
Nordson Corporation
Nordson Corporation is one of the leading manufacturers as well as distributors of products and systems designed to dispense, apply and control adhesives, coatings, polymers, sealants, biomaterials and other fluids. NDSN’s product line includes single-use components, stand-alone units for low-volume operations and microprocessor-based automated systems for high-speed, high-volume production lines.
Nordson’s expected earnings growth for the current year is 9.3%. The Zacks Consensus Estimate for current-year earnings has improved 2.3% over the past 60 days.
Donaldson Company, Inc.
Donaldson Company, Inc. is engaged in the manufacturing and selling of filtration systems and replacement parts across the world. Leading filtration technology, strong customer relationships, and a solid presence across diverse geographies are DCI’s three core strengths.
DCI’sexpected earnings growth for the current year is 10.1%. The Zacks Consensus Estimate for current-year earnings has improved 0.7% over the past 60 days.
RBC Bearings Incorporated
RBC Bearings Incorporated manufactures and distributes engineered bearings and precision components. RBC’s bearings are tools that reduce damage and energy loss and enable proper power transmission in most machines and mechanical systems.
RBC’s expected earnings growth for the current year is 18.6%. The Zacks Consensus Estimate for current-year earnings has improved 0.3% over the past 60 days.
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4 Industrial Stocks to Buy on Steady Rebound in Manufacturing Activity
Key Takeaways
The U.S. manufacturing sector is finally showing signs of recovery after struggling for over three years. The Institute of Supply Management (ISM) Manufacturing Purchasing Managers Index (PMI) jumped more than expected in January, indicating a steady recovery that started last year.
Although high prices continue to pose a major challenge for the economy, the burden has eased over the past year, which has seen a surge in demand.
Given the positive sentiment, it would be ideal to invest in four stocks from the manufacturing sector — ATS Corporation (ATS - Free Report) , Nordson Corporation (NDSN - Free Report) , Donaldson Company, Inc. (DCI - Free Report) and RBC Bearings Incorporated (RBC - Free Report) — that we have detailed below. Each of these stocks carries a Zacks Rank #2 (Buy) and assures good returns. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Manufacturing Activity Rebounds
The ISM Manufacturing PMI unexpectedly jumped to 52.6 in January from 47.9 in the previous month and surpassed analysts’ expectations of a rise to 48.5. This is the highest reading since 2022 as the sector expanded for the first time in 12 months.
Any reading above 47.5% over a prolonged period indicates an expansion of the overall economy. January’s jump was driven by a surge in new orders for manufactured goods. The New Orders Index rose 9.7% to 57.1% from December’s rise of 47.4%, and was the highest level since February 2022. This was also the first time the index gained since August 2025.
The Production Index climbed to 55.9%, a 5.2% rise from December’s seasonally adjusted figure of 50.7% and the highest level since February 2022.
Inflation has eased over the past two quarters, and the Federal Reserve cut interest rates by 75 basis points last year, which has somewhat eased borrowing costs and price pressures, thus driving demand.
The Federal Reserve held interest rates steady in its current range of 3.5% to 3.75% at the January meeting. However, the central bank said that it is open to more rate cuts depending on how inflation eases. Earlier, the Fed said that it is hopeful about inflation slowing down to 2.4% by the end of 2026 and economic growth accelerating to 2.3% this year.
4 Industrial Products Stocks With Upside
ATS Corporation
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 18.9%. The Zacks Consensus Estimate for current-year earnings has improved 0.8% over the past 60 days.
Nordson Corporation
Nordson Corporation is one of the leading manufacturers as well as distributors of products and systems designed to dispense, apply and control adhesives, coatings, polymers, sealants, biomaterials and other fluids. NDSN’s product line includes single-use components, stand-alone units for low-volume operations and microprocessor-based automated systems for high-speed, high-volume production lines.
Nordson’s expected earnings growth for the current year is 9.3%. The Zacks Consensus Estimate for current-year earnings has improved 2.3% over the past 60 days.
Donaldson Company, Inc.
Donaldson Company, Inc. is engaged in the manufacturing and selling of filtration systems and replacement parts across the world. Leading filtration technology, strong customer relationships, and a solid presence across diverse geographies are DCI’s three core strengths.
DCI’sexpected earnings growth for the current year is 10.1%. The Zacks Consensus Estimate for current-year earnings has improved 0.7% over the past 60 days.
RBC Bearings Incorporated
RBC Bearings Incorporated manufactures and distributes engineered bearings and precision components. RBC’s bearings are tools that reduce damage and energy loss and enable proper power transmission in most machines and mechanical systems.
RBC’s expected earnings growth for the current year is 18.6%. The Zacks Consensus Estimate for current-year earnings has improved 0.3% over the past 60 days.