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U.S. Manufacturing Sector Firing on All Cylinders: 5 Top Picks


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U.S. manufacturing sector has been witnessing resurgence under the Trump administration since last year, shrugging off its long phase of weak productivity and sluggish growth.

Under Trump's Presidency, manufacturing sector is flying high as manufacturers have increased capital spending and hiring driven by massive tax overhaul, deregulatory measures, strong domestic and global economy and robust business sentiment.

The demand for manufacturing products is on the rise. This trend is likely to be fueled further on the back of a massive infrastructure overhaul proposed by the government. At this stage, investment in manufacturing stocks with favorable Zacks Rank will be a lucrative move.

Robust Manufacturing Data for June

On Jun 2, the Institute for Supply Management reported that the U.S. manufacturing index rose to 60.2% in June from 58.7% in May. The June reading was highest in last four months as well as better than the consensus estimate of 58.4.

Notably, readings over 50% indicate more companies are expanding instead of shrinking. Of the 18 manufacturing industries, 17 reported growth in June. Moreover, June reading marked the 22nd consecutive month of PMI growth. June also reflected the second highest month of 2018 for the PMI, trailing only 60.8 in February.

Strong Hiring in Manufacturing Sector

According to the Department of Labor, manufacturing added 36,000 jobs in June which improved 12-months job addition to 285,000. This reflects a year-over-year increase of 2.3%, second highest since 2.4% yearly growth witnessed in 1995.

Within the manufacturing sector, durable goods industries, which produce industrial intermediaries, generated 89% of job additions. The Department of Labor also revealed that jobs in the manufacturing sector have grown nearly 3% since November 2016, when Trump was elected President.

Our Top Picks

The manufacturing sector accounts for nearly 12% of the U.S. GDP. In fact, strong manufacturing goods orders are normally associated with stronger economic activity.  At present, the U.S. economy is firmly placed on growth trajectory.

Considering these positives, investing in manufacturing stocks with strong growth potential will be a prudent decision. We narrowed down our choice to five stocks each of which carries either a Zacks Rank #1 (Strong Buy) or 2 (Buy). You can see the complete list of today's Zacks #1 Rank stocks here .

The chart below depicts price performance of our five picks in the last six months.

Zebra Technologies Corp. ZBRA builds tracking technology and solutions generating actionable information and insight, giving its clients unprecedented visibility into their businesses converting physical things into a digital voice.

Zebra Technologies sports a Zacks Rank #1. The company has expected earnings growth of 39.7% for current year. The Zacks Consensus Estimate for the current year has improved by 2.2% over the last 60 days.

Actuant Corp. ATU is a leading global provider of branded hydraulic tools and solutions, specialized products and services as well as highly engineered position and motion control systems for energy markets.

Actuant sports a Zacks Rank #1. The company has expected earnings growth of 27.7% for current year. The Zacks Consensus Estimate for the current year has improved by 2.9% over the last 60 days.

Regal Beloit Corp. RBC is a leading manufacturer of electrical and mechanical motion control and power generation products serving markets worldwide.

Regal Beloit sports a Zacks Rank #1. The company has expected earnings growth of 20.7% for current year. The Zacks Consensus Estimate for the current year has improved by 0.9% over the last 60 days.

Capstone Tribune Corp. CPST develops, designs, assembles and sells Capstone MicroTurbines. Capstone MicroTurbines provide power to hybrid electric vehicles that combine a primary source battery with an auxiliary power source.

Capstone Tribune carries a Zacks Rank #2. The company has expected earnings growth of 90% for current year. The Zacks Consensus Estimate for the current year has improved by 33.3% over the last 60 days.

Kadant Inc. KAI is a leading supplier of a range of products and systems for the global papermaking and paper-recycling industries including de-inking systems, stock-preparation equipment, water-management systems and papermaking accessories.

Kadant carries a Zacks Rank #2. The company has expected earnings growth of 15.8% for current year. The Zacks Consensus Estimate for the current year has improved by 2.2% over the last 60 days.

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Actuant Corporation (ATU): Free Stock Analysis Report

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Zebra Technologies Corporation (ZBRA): Free Stock Analysis Report

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.



This article appears in: Investing , Business , Stocks
Referenced Symbols: ATU , CPST , RBC , KAI , ZBRA



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