The U.S. manufacturing sector is trying to bounce back from its earlier lows. The U.S. Census Bureau reported last week that new orders for manufacturing goods increased $9.1 billion in March, up 1.6% month over month and in line with the consensus estimate.
March was also the second consecutive month of growth in factory orders after new orders for manufactured goods rose 1.2% in February.
Shipments jumped $1.5 billion, or 0.3%, to $583.3 billion, after increasing 1.4% in February. New orders for manufactured durable goods rose $7.3 billion, or 2.6%, to hit $283.3 billion.
The jump in March was led by robust orders for transportation equipment, which rose $6.9 billion, or 7.8%, to hit $95.9 billion, recording its second straight month of increase.
Although inflation is still high and high interest rate-induced price pressures continue to batter industries, the manufacturing sector is slowly trying to get back on its feet.
Inflation declined from its peak of 9.1% in June 2022 to 3.5% in March 2024, which raised hopes that the Federal Reserve will soon start rate cuts.
Federal Reserve Chairman Jerome Powell said last week that it is unlikely there will be another rate hike in the coming months. Also, the Federal Reserve plans three rate cuts by the end of this year.
Powell didn’t give a timeline for the first rate cut but market participants expect it in June. Lower interest rates bode well for the manufacturing sector and the broader economy, as it will ease price pressures.
Our Choices
Given this scenario, it would be ideal to invest in five stocks from the manufacturing sector — Applied Industrial Technologies, Inc. AIT, AZZ Inc. AZZ, AptarGroup, Inc. ATR, Eaton Corporation plc ETN and Chart Industries, Inc. GTLS — that we have detailed below. These stocks have a Zacks Rank #1 (Strong Buy) or 2 (Buy) and assure good returns. You can see the complete list of today’s Zacks #1 Rank stocks here.
Applied Industrial Technologies, Inc. is a distributor of value-added industrial products — including engineered fluid power components, bearings, specialty flow control solutions, power transmission products and miscellaneous industrial supplies. AIT’s products are mainly sold to original equipment manufacturers, and maintenance, repair and operations customers in Australia, North America, Singapore and New Zealand.
Applied Industrial Technologies’ expected earnings growth for the current year is 8.9%. The Zacks Consensus Estimate for current-year earnings has improved 1.2% over the past 60 days. AIT currently sports a Zacks Rank #1.
AZZ Inc. is a global provider of metal coating services, welding solutions, specialty electrical equipment and highly engineered services to the markets of power generation, transmission, distribution and industrial in protecting metal and electrical systems used to build and enhance the world’s infrastructure.
AZZ Inc.’s expected earnings growth for the current year is 6.6%. The Zacks Consensus Estimate for current-year earnings has improved 5.5% over the past 60 days. AZZ, at present, carries a Zacks Rank #2.
AptarGroup, Inc. is a global supplier of a broad range of innovative dispensing, sealing, and active packaging solutions for the beauty, personal care, home care, prescription drug, consumer health care, injectables, food and beverage markets. ATR’s main products include dispensing pumps, closures, aerosol valves, and elastomeric primary packaging components.
AptarGroup’s expected earnings growth for the current year is 11.7%. The Zacks Consensus Estimate for current-year earnings has improved 2.9% over the past 60 days. ATR currently has a Zacks Rank #2.
Eaton Corporation plc is a diversified power management company and a global technology leader in electrical components and systems. ETN sells products in more than 175 countries and has 92,000 employees.
Eaton Corporation’s expected earnings growth for the current year is 14.6%. The Zacks Consensus Estimate for current-year earnings has improved 1.7% over the past 60 days. ETN presently carries a Zacks Rank #2.
Chart Industries, Inc. is a leading independent global manufacturer of highly engineered equipment servicing end-market applications in Energy, Industry, Life Sciences and Respiratory Healthcare with a unique business portfolio. GTLS’ equipment is used in the production, storage, distribution and end-use of atmospheric, hydrocarbon and industrial gases.
Chart Industries’ expected earnings growth for the current year is 96.7%. The Zacks Consensus Estimate for current-year earnings has improved 6.3% over the past 60 days. GTLS presently has a Zacks Rank #2.
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Eaton Corporation, PLC (ETN) : Free Stock Analysis Report
Applied Industrial Technologies, Inc. (AIT) : Free Stock Analysis Report
AZZ Inc. (AZZ) : Free Stock Analysis Report
AptarGroup, Inc. (ATR) : Free Stock Analysis Report
Chart Industries, Inc. (GTLS) : Free Stock Analysis Report