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Philly Fed Factory Orders Hit 45-Year High: 5 Solid Picks

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Economic growth in Trump land is enjoying a boom, of late. The Conference Board Leading Economic Index, a gauge of upcoming U.S. economic activity, inched up 0.4% in April, indicating expectations of growth in the next half of the year. Notably, a downfall in unemployment rolls to its lowest level since 1973 indicates a tightening labor market.

Thursday’s Philly Fed data revealed that factory activity in the mid-Atlantic region has picked up this month, with American manufacturers intending to offer products at higher prices and adding more jobs. Notably, overcoming trade-related fears, the Empire State Manufacturing index has also rebounded in May. The strength in these two regional surveys has fueled hopes for a turnaround in the Institute for Supply Management (ISM) factory review, due in the next two weeks.

The U.S. economy will likely its uptrend on the December corporate tax overhaul, upbeat job market picture, stronger business and consumer confidence, and increased government spending. These tailwinds will continue to propel the manufacturing upturn higher, going forward.

Given the positives, investors can book high profits by betting on the hottest manufacturing stocks from the market.

Philly Fed Beats View, New Orders Hits 45-Year High

Per the Federal Reserve Bank of Philadelphia, manufacturing activity in southern New Jersey, Delaware and Pennsylvania has gained momentum in May. The Philadelphia Fed manufacturing index surged to its peak in a year at 34.4, above the market consensus estimate of 21.0 and April’s reading of 23.2. Furthermore, the new orders index went up 22 points in this month at 40.6, marking its highest level since March 1973. Notably, the future new orders index was also up 3 points in the month.

The shipment index inched up to 25.8 from 23.9 recorded in April. The prices received index, reflecting manufacturers own prices, climbed to 35.4, its strongest since February 1989. The employment index also touched its highest reading in seven months at 30.2. Notably, the survey indicated that firms are having an optimistic view for the next six months.

New York Manufacturing Index Rebounds in May

Per the Federal Reserve Bank of New York, manufacturing activity is booming in New York in May. Lagging Philly, the Empire State manufacturing index reached 20.1, higher than 15.8 noted in April.

The new orders index increased 7 points to 16.0 and the shipments index inched up 1.5 points to 19.1. The prices received index inched up 2 points to 23.0, reflecting a continued moderate selling price upswing. Notably, the six-month view index also rebounded to 31.1 in May, from 18.3 recorded in April and 44.1 in March. The surprise dip in the index in April can be traced back to trade-related apprehension.

ISM Manufacturing Strong, Manufacturers Recruiting!

The ISM index for national factory activity was recorded at 57.3 in April slightly below 59.3 in March. However, a reading of more than 50 indicates that the sector is expanding. Additionally, the New Orders Index came in at 61.2 or above for the 28th straight month and customers’ inventory levels remained low for the 19th consecutive month.

Manufacturers also kept adding jobs at a faster pace than the rest of the economy. Per the Bureau of Labor Statistics, employment in the U.S. manufacturing sector surged by 24,000 in April and has advanced by 245,000 in so far this year. The latest ISM data revealed that the Employment Index reached 54.2 in April, reflecting an upswing in the 19th consecutive month. The sector had added 222,000 new jobs last year, recommencing a recovery that had paused in 2015 and 2016.

Also, manufacturers, in the meantime, are paying better than other jobs. Average weekly earnings for production and non-supervisory employees came in at $907.78 last month, more than $720.25 for the private sector taken together.

5 Solid Manufacturing Picks

At present, the U.S. economy is firmly placed and economic data is mostly favorable. The manufacturing sector (accounting 12% of the U.S. GDP) will likely continue to rally on the back of stronger economic activity.   

At this juncture, apportioning your hard-earned money in manufacturing stocks with a high growth potential will be a wise decision. We have handpicked five top-ranked manufacturing picks that will likely add a sparkle to your portfolio.

These picks have a Zacks Rank #1 (Strong Buy) or #2 (Buy) and a VGM Score of A or B.

Caterpillar Inc. (CAT - Free Report) manufactures and sells mining and construction equipment, natural gas engines, diesel-electric locomotives and other related products in the market.

The Zacks Consensus Estimate for earnings has moved up 14.8% to $10.58 per share for 2018, in the last 30 days. Notably, the projected year-over-year earnings growth rate for this Connecticut-based company is currently pegged at 53.8% and 12.6% for 2018 and 2019, respectively. Caterpillar’s shares have gained 12.3% in the last six months. The stock sports a Zacks Rank #1 and flaunts a VGM Score of A. You can see the complete list of today’s Zacks #1 Rank stocks here.

Manitex International, Inc. (MNTX - Free Report) provides loading and engineered products in the global forum.

The Zacks Consensus Estimate for earnings has moved up 6% to 53 cents per share for 2018, in the last 30 days. Notably, the projected year-over-year earnings growth rate for this Illinois-based company is currently pegged at 165% and 51.9% for 2018 and 2019, respectively. Manitex International’s shares have gained 40.3% in the past six months. The stock carries a Zacks Rank #2 and a VGM Score of A.

Regal Beloit Corporation (RBC - Free Report) manufactures, designs and sells electrical motion controls, electric motors and power transmission products globally.

The Zacks Consensus Estimate for earnings has moved up 5.6% to $5.88 per share for 2018, in the last 30 days. Notably, the projected year-over-year earnings growth rate for this Wisconsin-based company is currently pegged at 20.7% and 10.2% for 2018 and 2019, respectively. Regal Beloit’s shares have gained 5.2% in the past six months. The stock carries a Zacks Rank #2 and a VGM Score of B.

Kaman Corporation (KAMN - Free Report) operates in the distribution and aerospace markets.

The Zacks Consensus Estimate for earnings has moved up nearly 1% to $3.13 per share for 2018, in the last 30 days. Notably, the projected year-over-year earnings growth rate for this Connecticut-based company is currently pegged at 40.4% and 12% for 2018 and 2019, respectively. Kaman Corporation’s shares have gained 25.7% in the past six months. The stock carries a Zacks Rank #2 and a VGM Score of B.  

Metso Corp. (MXCYY - Free Report) offers equipment and services in the aggregates, mining, oil, recycling, pulp, and process industries globally.

The Zacks Consensus Estimate for earnings has moved up 2.4% to 42 cents per share for 2018, in the last 30 days. Notably, the projected year-over-year earnings growth rate for this the company is currently pegged at 75% and 14.3% for 2018 and 2019, respectively. Metso’s shares have gained 1.5% in the past six months. The stock carries a Zacks Rank #2 and a VGM Score of B.  

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