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Industrial Production Rebounds in June: 6 Profitable Picks
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After declining in May, industrial production rebounded strongly in June. A substantial increase in manufacturing output and sustained gains in mining boosted the headline number. Coming on the back of strong retail sales numbers, the latest industrial production figures indicate that growth likely picked up in the second quarter. However, some economists warn that escalating trade tensions could curb business spending.
Fed Chair Jerome Powell agreed that the trade policy had created some uncertainty. But he also made positive comments about the state of the economy. A strong domestic and global economy is likely to continue supporting manufacturing and mining. This is why its makes good sense to invest in stocks from these domains.
Motor Vehicles, Parts Production Leads Gains
In June, industrial production increased 0.6% after suffering a 0.5% decline in May. The metric also advanced by an annual rate of 6% over the second quarter. This was its third straight quarterly increase. Manufacturing output increased by 0.8% and increased by 1.9% over the second quarter.
Motor vehicles and parts production was a major contributor to the increase in manufacturing output. This metric increased 7.8%, rebounding from an 8.6% decline in May caused by a fire, which drastically affected the assembly of trucks. Additionally, manufacturing output excluding motor vehicles and parts increased by 0.3% last month.
Mining output increased by 1.2% to hit a new all-time high. This comes on the back of a 2.2% increase in May and represents the fifth straight month of gains. The index also advanced by more than 19% in the second quarter. However, the output for utilities fell by 1.5%, marking the second consecutive month of decline.
Could a Trade War Derail Industrial Gains?
A section of economists believes that the Trump administration’s aggressive stance on trade issues and retaliatory measures from other countries could hurt business expenditure and production. Higher prices for consumers could also reduce domestic demand. The IMF has also sounded a warning on trade tensions, saying that retaliatory tariffs could hurt the global economy.
On Monday, Fed Chair Jerome Powell agreed that it was tough to determine “the ultimate outcome of current discussions over trade policy.” But he also made encouraging comments on the economy, stating that the United States was on the verge of “several years” of low inflation and robust job gains.
Capacity utilization figures seem to be in keeping with the Fed Chair’s views on the economy. In June, capacity utilization increased 0.3% to 78%. Though it represents a multi-year high, the level is 1.8% points lower than its long-run average. This means that some slack remains in the economy. Further growth can, therefore, be expected before inflation really kicks in.
Our Choices
The rebound in industrial production is yet another indication that the economy is on a firm footing. The fact that capacity utilization remains below its long-term average also indicates that further improvement can be expected from the metric.
Adding manufacturing and mining stocks to your portfolio looks like a smart option at this point. We have narrowed down our search to the following stocks based on a good Zacks Rank and other relevant metrics.
Actuant Corporation is involved in the designing, manufacture and distribution of various industrial products and systems for its clients in more than 30 countries.
Actuant has a Zacks Rank #1 (Strong Buy). The company has expected earnings growth of 28.2% for the current year. The Zacks Consensus Estimate for the current year has improved by 3.5% over the last 30 days.
The Manitowoc Company Inc. (MTW - Free Report) is a leading global manufacturer of cranes and lift solutions.
Manitowoc has a Zacks Rank #1. The company’s expected earnings growth for the current year is more than 100%. The Zacks Consensus Estimate for the current year has improved by 3.3% over the last 30 days.
Cleveland-Cliffs Inc. (CLF - Free Report) is the largest producer of iron ore pellets in North America.
Cleveland-Cliffs’ expected earnings growth for the current year is more than 100%. The Zacks Consensus Estimate for the current year has improved by 3.9% over the last 30 days. The stock has a Zacks Rank #1. You can seethe complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Hi-Crush Partners LP produces high-quality monocrystalline sand, a specialized mineral that is used as a proppant during the well completion process.
Hi-Crush Partners has a Zacks Rank #2 (Buy). The company’s expected earnings growth for the current year is more than 100%. The Zacks Consensus Estimate for the current year has improved by 3.5% over the last 60 days.
Meritor, Inc. is a global automotive parts manufacturer and supplier.
Meritor has a Zacks Rank #2. The company has expected earnings growth of 49.2% for the current year. The Zacks Consensus Estimate for the current year has improved by 1.1% over the last 60 days.
American Axle & Manufacturing Holdings, Inc. (AXL - Free Report) is a leading supplier of driveline and drivetrain systems, modules and components for the light vehicle market.
American Axle & Manufacturing has a Zacks Rank #2. The company has expected earnings growth of 2.7% for the current year. The Zacks Consensus Estimate for the current year has improved by 1.1% over the last 30 days.
Looking for Stocks with Skyrocketing Upside?
Zacks has just released a Special Report on the booming investment opportunities of legal marijuana.
Ignited by new referendums and legislation, this industry is expected to blast from an already robust $6.7 billion to $20.2 billion in 2021. Early investors stand to make a killing, but you have to be ready to act and know just where to look.
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Industrial Production Rebounds in June: 6 Profitable Picks
After declining in May, industrial production rebounded strongly in June. A substantial increase in manufacturing output and sustained gains in mining boosted the headline number. Coming on the back of strong retail sales numbers, the latest industrial production figures indicate that growth likely picked up in the second quarter. However, some economists warn that escalating trade tensions could curb business spending.
Fed Chair Jerome Powell agreed that the trade policy had created some uncertainty. But he also made positive comments about the state of the economy. A strong domestic and global economy is likely to continue supporting manufacturing and mining. This is why its makes good sense to invest in stocks from these domains.
Motor Vehicles, Parts Production Leads Gains
In June, industrial production increased 0.6% after suffering a 0.5% decline in May. The metric also advanced by an annual rate of 6% over the second quarter. This was its third straight quarterly increase. Manufacturing output increased by 0.8% and increased by 1.9% over the second quarter.
Motor vehicles and parts production was a major contributor to the increase in manufacturing output. This metric increased 7.8%, rebounding from an 8.6% decline in May caused by a fire, which drastically affected the assembly of trucks. Additionally, manufacturing output excluding motor vehicles and parts increased by 0.3% last month.
Mining output increased by 1.2% to hit a new all-time high. This comes on the back of a 2.2% increase in May and represents the fifth straight month of gains. The index also advanced by more than 19% in the second quarter. However, the output for utilities fell by 1.5%, marking the second consecutive month of decline.
Could a Trade War Derail Industrial Gains?
A section of economists believes that the Trump administration’s aggressive stance on trade issues and retaliatory measures from other countries could hurt business expenditure and production. Higher prices for consumers could also reduce domestic demand. The IMF has also sounded a warning on trade tensions, saying that retaliatory tariffs could hurt the global economy.
On Monday, Fed Chair Jerome Powell agreed that it was tough to determine “the ultimate outcome of current discussions over trade policy.” But he also made encouraging comments on the economy, stating that the United States was on the verge of “several years” of low inflation and robust job gains.
Capacity utilization figures seem to be in keeping with the Fed Chair’s views on the economy. In June, capacity utilization increased 0.3% to 78%. Though it represents a multi-year high, the level is 1.8% points lower than its long-run average. This means that some slack remains in the economy. Further growth can, therefore, be expected before inflation really kicks in.
Our Choices
The rebound in industrial production is yet another indication that the economy is on a firm footing. The fact that capacity utilization remains below its long-term average also indicates that further improvement can be expected from the metric.
Adding manufacturing and mining stocks to your portfolio looks like a smart option at this point. We have narrowed down our search to the following stocks based on a good Zacks Rank and other relevant metrics.
Actuant Corporation is involved in the designing, manufacture and distribution of various industrial products and systems for its clients in more than 30 countries.
Actuant has a Zacks Rank #1 (Strong Buy). The company has expected earnings growth of 28.2% for the current year. The Zacks Consensus Estimate for the current year has improved by 3.5% over the last 30 days.
The Manitowoc Company Inc. (MTW - Free Report) is a leading global manufacturer of cranes and lift solutions.
Manitowoc has a Zacks Rank #1. The company’s expected earnings growth for the current year is more than 100%. The Zacks Consensus Estimate for the current year has improved by 3.3% over the last 30 days.
Cleveland-Cliffs Inc. (CLF - Free Report) is the largest producer of iron ore pellets in North America.
Cleveland-Cliffs’ expected earnings growth for the current year is more than 100%. The Zacks Consensus Estimate for the current year has improved by 3.9% over the last 30 days. The stock has a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Hi-Crush Partners LP produces high-quality monocrystalline sand, a specialized mineral that is used as a proppant during the well completion process.
Hi-Crush Partners has a Zacks Rank #2 (Buy). The company’s expected earnings growth for the current year is more than 100%. The Zacks Consensus Estimate for the current year has improved by 3.5% over the last 60 days.
Meritor, Inc. is a global automotive parts manufacturer and supplier.
Meritor has a Zacks Rank #2. The company has expected earnings growth of 49.2% for the current year. The Zacks Consensus Estimate for the current year has improved by 1.1% over the last 60 days.
American Axle & Manufacturing Holdings, Inc. (AXL - Free Report) is a leading supplier of driveline and drivetrain systems, modules and components for the light vehicle market.
American Axle & Manufacturing has a Zacks Rank #2. The company has expected earnings growth of 2.7% for the current year. The Zacks Consensus Estimate for the current year has improved by 1.1% over the last 30 days.
Looking for Stocks with Skyrocketing Upside?
Zacks has just released a Special Report on the booming investment opportunities of legal marijuana.
Ignited by new referendums and legislation, this industry is expected to blast from an already robust $6.7 billion to $20.2 billion in 2021. Early investors stand to make a killing, but you have to be ready to act and know just where to look.
See the pot trades we're targeting>>