Sector Snap: Diversified industrials rise

Diversified industrials climb after analyst upgrades several on strengthening economy

• On 3:33 pm EDT, Friday September 11, 2009

NEW YORK (AP) -- Stocks of industrial companies that make engineered products rose Friday after an analyst upgraded the shares of several that stand to gain as the global recession ends.

Barclays analyst Shannon O'Callaghan said evidence is mounting that the economy appears to have hit a firm bottom, citing improved industrial production, which is currently less than demand, plus strengthening durable goods orders.

Auto production and housing starts are coming off "unsustainably low levels" and consumer confidence appears poised for an increase, O'Callaghan said.

"In addition to a turn in jobs, a turning in housing prices combined with the recovery in other asset prices could drive improvement in wealth effect impact on spending," the analyst wrote in a client note.

His views were echoed by KeyBanc analyst Jeffrey D. Hammond, whose recent visits to various diversified industrials left him with a similar impression.

"Across ... various end markets, it appears that early-cycle demand has demonstrated modest sequential improvement in select verticals while mid- and late-cycle markets have largely stabilized but have yet to reach an inflection point," Hammond said.

O'Callaghan upgraded shares of Crane Co., a Stamford, Conn.-based crane maker, to "Equal Weight" from "Underweight."

He also upgraded the stock of Pentair Inc., a Golden Valley, Minn., provider of flow control devices, to "Overweight" from "Equal Weight" and shares of Wesco International Inc., a Pittsburgh provider of electrical construction products, to "Overweight" from "Equal Weight."

In addition, he upgraded Textron Inc. to "Overweight" from "Equal Weight." Textron is a military contractor and aerospace company based in Providence, R.I.

In afternoon trading, Crane rose $1.31, or 5.4 percent, to $25.49, Pentair climbed 83 cents, or 2.8 percent, to $30.44 and Wesco added 77 cents, or 3 percent, to $26.62.

Buzz up!