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Manufacturing Revenues Poised to Increase: 5 Solid Picks

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Ritujay Ghosh
·4 min read
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The pandemic has been left most industries in bad state, with production cuts, layoffs and shutdowns biting into their profits. However, the economy is finally trying to get back on its feet with some sectors bouncing back. Factories too are operational despite a surge in cases and it is unlikely that the government will go for a shutdown.

According to a report from the Institute for Supply Management (ISM), manufacturing activity has also started picking up as the sector continues to revive from the earlier lows and manufacturing revenues to expand through 2021.

Manufacturing Activity to Expand

According to the latest report by ISM, economic expansion that started in June 2020 will continue through 2021. Manufacturing revenues are expected to jump 6.9% compared to a 1.3% decline in 2020. The ISM also said that revenues are expected to grow in 15-18 manufacturing industries and in 12-18 service sector industries.

Moreover, capital expenditures are expected to jump 2.4% in the manufacturing sector, following a 2.4% decline in 2020. Similarly, capital expenditure in the services sector is expected to increase 12.7% in 2021.

Economy Trying to Bounce Back

According to the report, manufacturing’s purchasing and supply executives forecast strong growth for 2021. Respondents reported operating at 85.7% of the normal capacity, an increase of 9.8% from 75.85% reported in May.

With factories now completely operational despite a surge in COVID-19 cases, the manufacturing sector is expected to continue benefiting from increased domestic orders from existing and new customers as well as higher export demand for industrial products.

Additionally, e-commerce too has been helping the sector as more people are buying products online amid the pandemic.

Our Choices

In such a scenario, we suggest four manufacturing stocks from different industries under the ambit of the Zacks Industrial Products sector. These stocks possess strong growth potential and have witnessed robust earnings estimate revisions in the last 60 days. 

ParkerHannifin Corporation PH is a global diversified manufacturer of motion & control technologies and systems. The company provides precision engineered solutions for a wide variety of mobile, industrial and aerospace markets.

The company’s expected earnings growth rate for the current year is 15.3%. The Zacks Consensus Estimate for current-year earnings has improved 5.3% over the past 60 days. ParkerHannifin Corporation carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Graham Corporation GHM designs and builds vacuum and heat transfer equipment for process industries and energy markets worldwide. 

The company’s expected earnings growth rate for the current year is 29.4%. The Zacks Consensus Estimate for current-year earnings has improved 3% over the past 60 days. Graham Corporation sports a Zacks Rank #1.

Graco Inc. GGG  manufactures, designs and sells equipment and systems used to measure, move, control, spray and dispense fluid as well as powder materials. 

The company’s expected earnings growth rate for the current year is 8.2%. The Zacks Consensus Estimate for current-year earnings has improved 1.4% over the past 60 days. Graco holds a Zacks Rank #2.

AGCO Corporation AGCO is a leading manufacturer and distributor of agricultural equipment and related replacement parts. The company offers a full product line of farm equipment through a wide network of dealers and distributors across 140 countries.

The company’s expected earnings growth rate for the current year is 15.8%. The Zacks Consensus Estimate for current-year earnings has improved 0.2% over the past 60 days. AGCO Corporation sports a Zacks Rank #1.

Emerson Electric Co. EMR is a diversified global engineering and technology company, with presence in Europe, the Americas, and Asia, Middle East & Africa. It offers a wide range of products and services to customers in consumer, commercial and industrial markets.

The company’s expected earnings growth rate for the current year is 0.9%. The Zacks Consensus Estimate for current-year earnings has improved 0.9% over the past 60 days. Emerson Electric has a Zacks Rank #2.

Zacks Top 10 Stocks for 2021

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Emerson Electric Co. (EMR) : Free Stock Analysis Report
 
AGCO Corporation (AGCO) : Free Stock Analysis Report
 
Graco Inc. (GGG) : Free Stock Analysis Report
 
ParkerHannifin Corporation (PH) : Free Stock Analysis Report
 
Graham Corporation (GHM) : Free Stock Analysis Report
 
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