Citi looks for potential winners in US industry

Citi analysts say companies that make production equipment will benefit from US mf'g growth

Associated Press

NEW YORK (AP) -- A group of Citi Investment Research analysts said Friday that increased manufacturing investment in the U.S. will benefit companies that make equipment used in American facilities.

The analysts said overseas investments in U.S. manufacturing have increased in recent years, and while the gains are often attributed to a renaissance in the manufacturing sector, there are actually a number of reasons for the change; including global economic trends, changes in tax policy, the educated U.S. workforce, wage inflation in China and emerging markets, declining union membership and strikes.

"The uptick in U.S. manufacturing is a broad-based thematic trend with long-term implications, but does not lend itself to any near-term actionable investment conclusions," the analysts wrote. But if the uptick continues, it will help companies that do business in machinery, process controls, and other automation markets that make equipment used in new production facilities, they said.

Those companies include Emerson Electric Co., General Electric Co., United Rentals Inc., ABB Ltd., Siemens AG and Fanuc Corp., the analysts said.

They said the increase in manufacturing could be good news for companies with a lot of exposure to U.S. industry, like United Rentals, Carlisle Cos., Allison Transmission Holdings Inc., and Crane Co.

Stocks moved higher Friday, and the Standard & Poor's 500 reached its highest closing since late 2007. Shares of Emerson Electric rose 54 cents to finish at $55.89 and reached an annual high of $56. GE gained 74 cents, or 3.5 percent, to $22.04 on the same day it posted strong fourth-quarter earnings. United Rentals shares added 76 cents to $50.04 and peaked at a 52-week high of $50.37.

In January shares of Danaher Corp., Deere & Co., Flowserve Corp., Snap-on Inc., Dove Corp., Eaton Corp., Ingersoll-Rand PLC, and Illinois Tool Works Inc. have all reached their highest prices in at least a year.

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