A gradual reopening of the economy amid rapid progress in vaccination have allowed the economically sensitive industrial sector to do well in recent times. In fact, the Industrial Select Sector SPDR (XLI) has gained 19% year to date.
Providing a leg up to industrials, on Aug 10, the U.S. Senate also passed the $1 trillion bipartisan infrastructure bill. The vote was 69-30 in favor of the bill and it has now moved to the House of Representatives for approval. The bill calls for additional spending of $550 billion on new public works, and includes $110 billion spending on roads and bridges, among others.
Besides that, Senate Democrats also passed a budget resolution for the $3.5 trillion bill on Aug 11, which includes $83 billion for the Commerce Committee that includes investments in transportation, research, manufacturing and so on.
Manufacturing activity in the United States has continued to expand, rising for the 14th consecutive month in July. Per the Institute for Supply Management, the manufacturing purchasing managers’ index for July came in at 59.5% compared to a reading of 60.6% in June. Even though growth moderated from June, manufacturing activity expand as any reading above 50 indicates expansion.
Reflective of the sustained uptick in manufacturing, factory orders in the United States continued to improve in June. Per a Reuters article, citing the Commerce Department, factory orders increased 1.5% in June, following a rise of 2.3% in May. In fact, new orders increased in 13 of the previous 14 months, as mentioned in a MarketWatch article, citing the Commerce Department. Such positive developments are sure to aid industrial stocks going forward as the U.S. economy continues to recover from the pandemic-induced slump.
5 Stocks to Buy Now
Industrial stocks have risen this year as the U.S. economy continues to reopen, and the passage of both the bipartisan infrastructure bill as well as the larger $3.5 trillion bill, should also provide them a further boost. This then seems like a good time to invest in industrial products stocks with strong fundamentals that can make the most of this potential upswing. We have handpicked five such stocks that carry a Zacks Rank #1 (Strong Buy) or 2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Mueller Industries, Inc. MLI manufactures and sells copper, brass, aluminum and plastic products. In its second-quarter 2021 earnings release on Jul 20, management said that it expects robust demand in the building construction sectors to continue for the rest of the year.
Shares of Mueller Industries have risen 28.6% year to date. The company currently flaunts a Zacks Rank #1. The Zacks Consensus Estimate for its current-year earnings increased 52.4% over the past 60 days. The company’s expected earnings growth rate for the current year is more than 100%.
Columbus McKinnon Corporation CMCO is a broad-line designer, manufacturer and supplier of sophisticated material handling products and integrated material handling solutions that are widely distributed to industrial and consumer markets worldwide. On Jul 27, the company announced the launch of Intelli-Connect Mobile+, which provides advanced diagnostics and analytics for predictive maintenance of hoists and cranes, and increase uptime.
Shares of this Zacks Rank #1 company have risen 16% year to date. The Zacks Consensus Estimate for its current-year earnings increased nearly 26% over the past 60 days. The company’s expected earnings growth rate for the current year is more than 100%.
AZZ Inc. AZZ provides galvanizing and metal coating solutions, welding solutions, specialty electrical equipment, and engineered services to the power generation, transmission, distribution, refining, and industrial markets. On Jan 4, AZZ announced that the company has acquired all the assets of Acme Galvanizing, Inc. which was a privately held hot-dip galvanizing and zinc electroplating company.
Shares of AZZ have risen 11.7% year to date. The Zacks Consensus Estimate for its current-year earnings increased 13% over the past 60 days. This Zacks Rank #1 company’s expected earnings growth rate for the current year is 44.1%.
Lindsay Corporation LNN, together with its subsidiaries, provides water management and road infrastructure products and services, and operates in two segments, Irrigation and Infrastructure. In fact, in its fiscal third-quarter 2021 results released on Jul 1, management said it remains optimistic regarding the outlook of the infrastructure business, as pandemic-related restrictions are lifted and road construction activity normalizes.
Shares of Lindsay have risen 34.7% year to date and the company currently has a Zacks Rank #2. The Zacks Consensus Estimate for its current-year earnings increased 16.4% over the past 60 days. The company’s expected earnings growth rate for the current year is 17.4%.
EnPro Industries, Inc. NPO engages in the design, development, manufacture, marketing and service of engineered industrial products worldwide.
Shares of this Zacks Rank #2 company have risen 16.6% year to date. The Zacks Consensus Estimate for its current-year earnings increased 10.3% over the past 60 days. The company’s expected earnings growth rate for the current year is 34.4%.
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.