Last weekend Boeing (BA) sold $85 billion worth of its new 777x aircraft in one day. Boeing shares are at an all-time high, taking off at a remarkably steep angle. It's not just jet engines. If you break down the supply line of a jet to the most basic part, the humble ball bearing, you see an industrial and consumer consumption pattern that's being widely overlooked.
It's part of a trend. Scared by endless talk of bubbles in tech, investors are missing the fact that record highs for the S&P500 (^GSPC) are being pushed by old-school companies selling big ticket goods. The entire product food chain from ball-bearings in the guts of a motor to the end market sellers show a strong fundamental economy.
"Basic building blocks of industry are coming back," says Piper Jaffray senior technical research analyst Craig Johnson. "You've got industries like ball bearings and stocks like (RBC Bearings Inc) ROLL that are making all time highs."
Ball bearings are industrial truth. It's impossible to make jets, cars, motors, or hard-drives without using parts from RBC Bearings or one of its competitors. The reality of the booming bearing industry is reflected in the share prices of its customer base. Companies that keep America rolling are having been in the market for years. "Planes, trains, and automobiles, they all fit into it," summarizes Johnson. "It's not the small retailers that are doing fabulous. It's Winnebago... it's all the bigger ticket items that are doing well. So people I guess are rewarding themselves after having gone through a very difficult period of time."
Investors should consider rewarding themselves by taking a look at more of Johnson's picks in the attached video.
Brunswick (BC). Maker of inboard and ourboard boat motors, among other things:
Ford (F). Ready to roll again after a nice chart consolidation:
- Consumer Discretionary
- ball bearing