5 Solid Stocks to Buy on Robust Durable Orders
According to data released by the Commerce Department on Thursday, U.S. durable goods order rose 2.6% in March. The rise can be attributed to an increase of 44.5% in orders for commercial aircraft. Moreover, orders for defense capital-goods jumped, giving a clear indication that the U.S. manufacturing industry is on steady track.
Earlier this month, the Commerce Department said that factory orders rose 1.2%, primarily on orders for transportation equipment aided by robust orders for civilian airlines. Moreover, the U.S. ISM manufacturing PMI registered 59.3% growth. U.S. manufacturing industry is benefiting from strong global growth, which is leading to a sharp rise in durable goods’ orders.
The rise in orders of commercial aircraft and defense capital goods bears testimony to the underlying strength in the country’s economy. Against this backdrop, it makes good sense to invest in stocks that are poised to gain from the solid durable goods orders data.
Higher Durable Goods Order to Boost Confidence
Orders for durable goods rose 2.6% in March, higher than the estimated increase of 1.6%. The rise was mainly backed by strong demand for commercial aircraft, which surged 44.5% to almost $21 billion. This follows a 39.1% rise in February after a 27.9% drop in January. Apart from commercial aircraft, the rise in durable goods orders was driven by a 0.9% increase in orders for defense capital-goods.
The overall demand for transportation increased 7.6% to $91.4 billion in March, making it clear that airlines and defense capital-goods are driving durable goods’ orders. Also, orders for motor vehicles and parts increased 0.1% to $57.7 billion. Although the increase is negligible, the figures indicate that the U.S. economy is booming and riding high on strong industrial growth.
Manufacturing Sector Expands, Factory Orders Surge
The ISM Manufacturing Index came in at 59.3%. Although the index slipped 1.5%, the signs are positive, as 17 of the 18 manufacturing industries registered growth. The March PMI figure also marks overall economic growth for the 107th consecutive month.
Moreover, the New Orders index came in at 61.9%, indicating strong demand. Exports orders also remained robust because of a weaker U.S. currency, while the Price Index is at its highest level since April 2011, registering 78.1%.
Meanwhile, new orders for U.S. made goods increased in February. The growth can be attributed to robust demand for transportation equipment. Factory orders grew 1.2% owing to a 7% rise in transportation equipment, aided by a 26.2% jump in orders of commercial aircraft.
Our Choices
The latest data, which reflects strong orders for durable goods, is a clear indication that economic activity in the manufacturing sector is expanding. Moreover, the robust growth in orders for commercial aircraft and defense-capital goods is an indication of strong demand for U.S. made goods. Also, economists believe that investment growth is likely to pick up in the near term.
Strong factory orders aided by steady demand for transportation equipment such as civil aircraft and defense-capital goods hint a bullish economic outlook. Naturally, investing in stocks that are likely to gain from strong durable goods’ order looks like a good option at this point. We have narrowed down our search to the following stocks based on a good Zacks Rank #2 (Buy) and other relevant metrics.You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
The Boeing Company BA is the world's largest aerospace company and a leading manufacturer of commercial jetliners and defense, space and security systems.
Boeing hasanexpected earnings growth rate of 17.1% for the current year. The Zacks Consensus Estimate for the current year has improved by 2.9% over the last 30 days.
Lockheed Martin Corporation LMT is a global security and aerospace company principally engaged in the research, design, development, manufacture, integration and sustainment of advanced technology systems, products and services.
Lockheed Martin has an expected earnings growth rate of 18.8% for the current year. The Zacks Consensus Estimate for the current year has improved 3.2% over the last 30 days. T
Wesco Aircraft Holdings, Inc. WAIR distributes and provides supply chain management services to the global aerospace industry.
Wesco Aircraft Holdings hasan expected earnings growth rate of 19.8% for the current year. The Zacks Consensus Estimate for the current year has improved 1% over the last 30 days.
CPI Aerostructures, Inc. CVU is engaged in contract production of structural aircraft parts and sub-assemblies for the commercial and military sectors of the aircraft industry.
CPI Aerostructures has an expected earnings growth rate of 21.5% for the current year. The Zacks Consensus Estimate for the current year has improved 8.2% over the last 60 days.
Rockwell Collins, Inc. COL is a leader in aviation and high-integrity solutions for commercial and military customers around the world.
Rockwell Collins hasanexpected earnings growth rate of 17.4% for the current year. The Zacks Consensus Estimate for the current year has improved by 1.4% over the last 60 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>>
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
The Boeing Company (BA) : Free Stock Analysis Report
Lockheed Martin Corporation (LMT) : Free Stock Analysis Report
Wesco Aircraft Holdings, Inc. (WAIR) : Free Stock Analysis Report
Rockwell Collins, Inc. (COL) : Free Stock Analysis Report
CPI Aerostructures, Inc. (CVU) : Free Stock Analysis Report
To read this article on Zacks.com click here.
Zacks Investment Research
