U.S. manufacturing output surpassed estimates in August. The gain can be attributed to an increase in production of machinery and primary metals. Investors can take a look at a couple of stocks that are well positioned to gain from this rebound.
Industrial Production Up, Thanks to Mining Activities
According to a report by Federal Reserve, industrial production jumped 0.6% in August. Per a Reuters’ poll, the figure was well above economists’ expectations of 0.2%. The recovery was driven by a rebound of 1.4% in mining and rise in manufacturing output. This jump is the largest increase in industrial production since August 2018 and includes a 0.1% slump in July.
The industrial production data is unexpectedly good as the manufacturing sector witnessed contraction in both the first and second quarter of 2019, thanks to U.S.-China trade dispute and global economic slowdown.
In fact, per a report by the Institute of Supply Management (ISM), economic activity in the sector contracted last month as well. ISM’s PMI index, which measures everything from new orders, production and inventories to exports and imports, stood at 49.1% last month.
However, industrial production’s surprising rebound is indicative of increased factory activity. Rebound in business equipment (1%), construction (0.9%) and material production (0.9%) also propelled the sector. On an annualized basis, industrial production rose 0.4%. Needless to say, the manufacturing sector holds promise and therefore investing in it could be prudent at present.
We have chosen four stocks from the industrial products sector which investors can consider adding to their portfolio. All of these stocks carry a Zacks Rank #1 (Strong Buy) or 2 (Buy).
Albany International Corp. AIN is a machine industry company. The company’s businesses primarily comprise of textile and materials processing.
Albany International carries a Zacks Rank #1. In fact, the company’s stock price has already outperformed the Zacks Industrial Products Market on a year-to-date basis (+39.9% vs +32.7%). The Zacks Consensus Estimate for its current-year earnings has risen 1.5% over the past 60 days. You can see the complete list of today’s Zacks #1 Rank stocks here.
Zebra Technologies Corporation ZBRA is a designer and manufacturer of automatic identification and data capture products.
Zebra Technologies sports a Zacks Rank #1. In fact, the company’s stock price has already outperformed the Zacks Industrial Products Market on a year-to-date basis (+31.3% vs +24.0%). The Zacks Consensus Estimate for its current-year earnings has risen 2% over the past 60 days.
Sealed Air Corporation SEE is a packaging company offering innovative food and product packaging solutions.
Sealed Air carries a Zacks Rank #2. In fact, the company’s stock price has already outperformed the Zacks Industrial Products Market on a year-to-date basis (+19.3% vs -22.3%). The Zacks Consensus Estimate for its current-year earnings has risen 1.8% over the past 60 days.
Plug Power Inc. PLUG is an electrical equipment manufacturing company. The company designs and manufactures hydrogen fuel cell systems.
Plug Power carries a Zacks Rank #2. In fact, the company’s stock price has already outperformed the Zacks Industrial Products Market on a year-to-date basis (+127.5% vs +11.7%). The Zacks Consensus Estimate for its current-year earnings has risen 5.3% over the past 60 days.
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