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Industrial Production Rises Amid Inflation Woes: 4 Stocks to Grab
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Key Takeaways
Industrial production rose 0.1% in May after 0.9% April; index edged up to 102.6 from 102.5.
ISM Manufacturing PMI rose to 54, highest in four years, signaling expansion for fifth month.
Robust demand for factory goods continues to support the sector despite inflation and potential Fed rate hike.
The U.S. manufacturing sector is making a slow but steady recovery. The recovery comes amid high inflation and concerns over a potential rate hike in the near term, which could pose a major challenge for the sector, which has already struggled for several quarters.
Even then, surging demand for manufactured goods has been driving the sector this year.
Given the positive sentiment, it would be ideal to invest in four stocks from the manufacturing sector — Caterpillar Inc. (CAT - Free Report) , Helios Technologies, Inc. (HLIO - Free Report) , Dover Corporation (DOV - Free Report) and Luxfer Holdings PLC (LXFR - Free Report) — that we have detailed below.
Industrial Production Increases
Industrial production rose 0.1% in May after increasing 0.9% in April, the Federal Reserve reported last week. The industrial production index came up with a reading of 102.6 in May, up from 102.5 in the month before.
Year over year, industrial production rose 1.7%. Manufacturing output, a component of the broader industrial production index, came in at 97.9 in May. Durable goods production climbed 0.8% sequentially in May.
Manufacturing output slowed in May but continued its northbound journey. The ISM Manufacturing PMI climbed to 54 in May, reaching its highest level in four years after rising to 52.7 in April.
Any reading above 50 indicates expansion, and this marks the fifth consecutive month the PMI has stayed above that threshold. The continued strength suggests that the manufacturing sector is gradually recovering and maintaining steady momentum.
Higher prices have been weighing on the sector. The Federal Reserve kept interest rates unchanged in its present range of 3.5-3.75%. Fears of inflation soaring further have prompted the Federal Reserve to consider a near-term rate hike. Market participants now expect the central bank to hike interest rates by a quarter percentage point this year.
However, robust demand for factory goods has been boosting the manufacturing sector.
4 Industrial Products Stocks With Upside
Caterpillar
Caterpillar Inc. is the largest global construction and mining equipment manufacturer. Given that it serves a gamut of sectors — infrastructure, construction, mining, oil & gas and transportation, CAT is considered a bellwether of the global economy. Caterpillar has more than 4 million products with an extensive dealer network of 165 dealers spanning 191 countries.
Caterpillar’s expected earnings growth for the current year is 29.3%. The Zacks Consensus Estimate for current-year earnings has improved 7.7% over the past 60 days. CAT currently carries a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.
Helios Technologies
Helios Technologies, Inc. is an industrial technology company. HLIO develops and manufactures hydraulic and electronic control solutions. Helios Technologies’ operating subsidiaries include Sun Hydraulics, Enovation Controls and Faster Group.
Helios Technologies’ expected earnings growth for the current year is 12.9%. The Zacks Consensus Estimate for next year's earnings has improved 5.5% over the past 60 days. Currently, HLIO has a Zacks Rank #1.
Dover Corporation
Dover Corporation is an industrial conglomerate producing a wide range of specialized industrial products and manufacturing equipment.
Dover Corporation’s expected earnings growth for the current year is 10.4%. The Zacks Consensus Estimate for next year's earnings has improved 0.7% over the past 60 days. Currently, DOV has a Zacks Rank #2.
Luxfer Holdings
Luxfer Holdings PLC is a materials technology company specializing in the design, manufacture and supply of high-performance materials, components and gas cylinders. LXFR had two divisions, Elektron and Gas Cylinders. The Elektron division focuses on specialty materials based on magnesium, zirconium and rare earths. The Gas Cylinders division manufactures products made from aluminum, composites and other metals using technically advanced processes.
Luxfer Holdings’ expected earnings growth for the current year is 8.1%. The Zacks Consensus Estimate for next year's earnings has improved 7.1% over the past 60 days. LXFR currently sports a Zacks Rank #1.
View the Zacks #1 Rank List
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Industrial Production Rises Amid Inflation Woes: 4 Stocks to Grab
Key Takeaways
The U.S. manufacturing sector is making a slow but steady recovery. The recovery comes amid high inflation and concerns over a potential rate hike in the near term, which could pose a major challenge for the sector, which has already struggled for several quarters.
Even then, surging demand for manufactured goods has been driving the sector this year.
Given the positive sentiment, it would be ideal to invest in four stocks from the manufacturing sector — Caterpillar Inc. (CAT - Free Report) , Helios Technologies, Inc. (HLIO - Free Report) , Dover Corporation (DOV - Free Report) and Luxfer Holdings PLC (LXFR - Free Report) — that we have detailed below.
Industrial Production Increases
Industrial production rose 0.1% in May after increasing 0.9% in April, the Federal Reserve reported last week. The industrial production index came up with a reading of 102.6 in May, up from 102.5 in the month before.
Year over year, industrial production rose 1.7%. Manufacturing output, a component of the broader industrial production index, came in at 97.9 in May. Durable goods production climbed 0.8% sequentially in May.
Manufacturing output slowed in May but continued its northbound journey. The ISM Manufacturing PMI climbed to 54 in May, reaching its highest level in four years after rising to 52.7 in April.
Any reading above 50 indicates expansion, and this marks the fifth consecutive month the PMI has stayed above that threshold. The continued strength suggests that the manufacturing sector is gradually recovering and maintaining steady momentum.
Higher prices have been weighing on the sector. The Federal Reserve kept interest rates unchanged in its present range of 3.5-3.75%. Fears of inflation soaring further have prompted the Federal Reserve to consider a near-term rate hike. Market participants now expect the central bank to hike interest rates by a quarter percentage point this year.
However, robust demand for factory goods has been boosting the manufacturing sector.
4 Industrial Products Stocks With Upside
Caterpillar
Caterpillar Inc. is the largest global construction and mining equipment manufacturer. Given that it serves a gamut of sectors — infrastructure, construction, mining, oil & gas and transportation, CAT is considered a bellwether of the global economy. Caterpillar has more than 4 million products with an extensive dealer network of 165 dealers spanning 191 countries.
Caterpillar’s expected earnings growth for the current year is 29.3%. The Zacks Consensus Estimate for current-year earnings has improved 7.7% over the past 60 days. CAT currently carries a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.
Helios Technologies
Helios Technologies, Inc. is an industrial technology company. HLIO develops and manufactures hydraulic and electronic control solutions. Helios Technologies’ operating subsidiaries include Sun Hydraulics, Enovation Controls and Faster Group.
Helios Technologies’ expected earnings growth for the current year is 12.9%. The Zacks Consensus Estimate for next year's earnings has improved 5.5% over the past 60 days. Currently, HLIO has a Zacks Rank #1.
Dover Corporation
Dover Corporation is an industrial conglomerate producing a wide range of specialized industrial products and manufacturing equipment.
Dover Corporation’s expected earnings growth for the current year is 10.4%. The Zacks Consensus Estimate for next year's earnings has improved 0.7% over the past 60 days. Currently, DOV has a Zacks Rank #2.
Luxfer Holdings
Luxfer Holdings PLC is a materials technology company specializing in the design, manufacture and supply of high-performance materials, components and gas cylinders. LXFR had two divisions, Elektron and Gas Cylinders. The Elektron division focuses on specialty materials based on magnesium, zirconium and rare earths. The Gas Cylinders division manufactures products made from aluminum, composites and other metals using technically advanced processes.
Luxfer Holdings’ expected earnings growth for the current year is 8.1%. The Zacks Consensus Estimate for next year's earnings has improved 7.1% over the past 60 days. LXFR currently sports a Zacks Rank #1.