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5 Stocks to Buy Amid Continued Expansion in Manufacturing

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Kaustav Ghosh
·5 min read
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The manufacturing sector in the United States has been continuing steady expansion since the COVID-induced slump toward the earlier part of last year. Notably, per the latest report by the Institute for Supply Management (“ISM”), the manufacturing purchasing managers’ index (“PMI”) for February was reported at 60.8%, compared to the reading of 58.7% in January. This marked the ninth successive month of expansion following the contractions witnessed in March, April and May last year. Moreover, this equaled the highest reading since February 2018 when the manufacturing PMI was also reported at 60.8%.

Other indexes within the PMI that witnessed growth in February include the New Orders Index, which was reported at 64.8% compared to 61.1% in January. In fact, the index saw nine consecutive months of gains. Meanwhile, the Production Index increased to 63.2% in February, rising from the January reading of 60.7%. The Employment Index also saw expansion to 54.4% in February compared to a reading of 52.6% in January.

Notably, the availability of vaccines is instrumental in complete resumption of economic activities, which in turn, is sure to give a leg up to manufacturing. Toward that end, the United States received its third vaccine for emergency use. Notably, Johnson & Johnson JNJ stated in a press release that the U.S. Centers for Disease Control and Prevention’s Advisory Committee recommended its single-shot COVID-19 vaccine under the emergency use authorization issued by the FDA. The company further mentioned in the press release that by the end of March, it expects to deliver enough vaccines to enable the full vaccination of more than 20 million people in the country. Moreover, the company expects to deliver 100 million doses of the vaccine during the first half of 2021.

Meanwhile, a fresh round of fiscal stimulus should also provide a boost to the economy and in turn, the manufacturing sector as it constitutes a major portion of the broader economic activity. Notably, President Joe Biden’s $1.9-trillion fiscal relief bill was passed by the U.S. House of Representatives on Feb 27 and it has now moved to the Senate. Moreover, the U.S. Federal Reserve Chairman Jerome Powell stated in his testimony before the Senate Banking Committee last week that the Fed is committed to use its full range of tools to provide support to the economy. Such positive developments are sure to bolster manufacturing as the economy begins to gradually resume all activities. In fact, the Congressional Budget Office stated that the U.S. economy is expected to grow 4.6% in 2021, following a contraction of 3.5% in 2020, as quoted in a Reuters article.

5 Top Stocks to Buy Now

The U.S. manufacturing sector has maintained a good run for nine consecutive months as it continues to recover strongly from the pandemic-induced slump witnessed during the early part of last year. Moreover, an increased availability of vaccines as well as a fresh round of fiscal stimulus and the Fed’s commitment to provide support to the economy bode well for the manufacturing sector. This makes it a good time to invest in industrial stocks that can make the most of this robust rebound. Notably, 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.

ACM Research, Inc. ACMR, together with its subsidiaries, develops, manufactures, and sells single-wafer wet cleaning equipment for enhancing the manufacturing process and yield for integrated chips worldwide. The company currently has a Zacks Rank #1. The Zacks Consensus Estimate for its current-year earnings has risen 12.3% over the past 60 days. The company’s expected earnings growth rate for the current year is 38.4%.

Deere & Company DE, together with its subsidiaries, manufactures and distributes various equipment worldwide. The company’s Agriculture and Turf segment provides various agriculture and turf equipment, and related service parts, including large, medium, and utility tractors and so on. The company currently has a Zacks Rank #1. The Zacks Consensus Estimate for its current-year earnings has moved 21.5% north over the past 60 days. The company’s expected earnings growth rate for the current year is 80.3%.

EnPro Industries, Inc. NPO designs, develops, manufactures, and markets engineered industrial products worldwide. The company operates in two segments, Sealing Products and Engineered Products. The company currently has a Zacks Rank #1. The Zacks Consensus Estimate for its current-year earnings has risen 64.6% over the past 60 days. The company’s expected earnings growth rate for the current year is 12%.

iRobot Corporation IRBT designs, builds, and sells robots in the United States, Europe, the Middle East, Africa, Japan, and internationally. The company currently has a Zacks Rank #1. The Zacks Consensus Estimate for its current-year earnings has moved up 37.1% over the past 60 days. The company’s expected earnings growth rate for next year is 70.1%.

Crown Holdings, Inc. CCK designs, manufactures and sells packaging products and equipment for consumer goods and industrial products in the Americas, Europe, and the Asia Pacific. The company currently has a Zacks Rank #2. The Zacks Consensus Estimate for its current-year earnings has climbed 8% over the past 60 days. The company’s expected earnings growth rate for the current year is 16.2%.

Zacks Top 10 Stocks for 2021

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Deere & Company (DE) : Free Stock Analysis Report
 
Crown Holdings, Inc. (CCK) : Free Stock Analysis Report
 
ACM Research, Inc. (ACMR) : Free Stock Analysis Report
 
EnPro Industries (NPO) : Free Stock Analysis Report
 
iRobot Corporation (IRBT) : Free Stock Analysis Report
 
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