Despite the pickup in the pace of vaccination, coronavirus cases in the United States are soaring. However, it isn’t affecting economic growth this year the way it did last year. Lately, there has been a momentous uptick in consumer spending. The labor market has shown enough signs of recuperating and the service side of the U.S. economy is up and running. Most importantly, manufacturing remains a bright spot as the broader economy shrugged off the drubbing it took last year due to the pandemic.
Industrial production, in particular, bounced back in March from the slump in February. After all, harsh winter weather conditions impacted output in the month of February. Nonetheless, per the Federal Reserve, industrial output increased 1.4% last month from a revised 2.6% decline in the prior month.
Industrial output rebounded on the back of stimulus measures taken by the government to pep up the economy and also the rollout of the vaccine normalized business activity across the states. However, utility output dropped 11.4% in March versus a gain of 9.2% in February. This is because of the drop in demand for heating, thanks to the swing in temperatures from a cold February to a rather warm March, added the Federal Reserve.
Nevertheless, the output of motor vehicles and parts advanced 2.8% from a drop of 10% in February. Similarly, the output of mining that generally includes oil and gas exploration climbed 5.7% last month from a drop of 5.6% in the previous month. Above all, total industrial output increased at an annual rate of 2.5% for the first quarter, noted the Federal Reserve.
Additionally, industries’ production capacities too expanded last month. Remarkably, the capacity utilization rate for the industrial sector increased to 74.4 in March from February’s 73.4, per the Fed report.
5 Top Industrial Stocks to Invest In Right Away
March’s top-line industrial output numbers shows that the manufacturing sector is in the pink and is unperturbed by the recent rise in coronavirus cases. Lest we forget, the Institute of Supply Management’s manufacturing index for the month of March came in at 64.7% versus February’s reading of 60.9%, as mentioned in a CNBC article.
What’s more encouraging is that two of United States’ regional manufacturing gauges are showing signs of strength this month, as mentioned in a MarketWatch article. The New York Federal Reserve’s Empire State Index touched the highest reading in April since October 2017, while the Philadelphia Federal Reserve manufacturing index hit the highest level in nearly 50 years this month, per the MarketWatch article.
On this positive note, we have selected five solid industrial stocks that are poised to gain from the strength in the manufacturing sector and scale upward in the near future. These stocks currently flaunt a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Deere & Company DE is currently the world’s largest producer of agricultural equipment, manufacturing agricultural machinery since 1837 under the iconic John Deere brand with its signature green and yellow color scheme. The Zacks Consensus Estimate for its current-year earnings has advanced 21.5% over the past 60 days. The company’s expected earnings growth rate for the current year is 83.7%.
Alcoa Corp. AA is a global industry leader in bauxite, alumina and aluminum products. The Zacks Consensus Estimate for its current-year earnings has jumped 99.4% over the past 60 days. The company’s expected earnings growth rate for the current year is a whopping 378.5%.
Astec Industries, Inc. ASTE is a leading manufacturer and marketer of road building equipment. The Zacks Consensus Estimate for its current-year earnings has risen 6.3% over the past 60 days. The company’s expected earnings growth rate for the current year is 14.3%.
EnPro Industries NPO is a diversified manufacturer of proprietary engineered products used in critical applications. The Zacks Consensus Estimate for its current-year earnings has climbed 63.9% over the past 60 days. The company’s expected earnings growth rate for the current year is 12.8%.
Encore Wire Corporation WIRE is a low-cost manufacturer of copper electrical building wire and cable. The Zacks Consensus Estimate for its current-year earnings has moved up 35.7% over the past 60 days. The company’s expected earnings growth rate for the current and next year is 3.3% and 11.8%, respectively.
Zacks Top 10 Stocks for 2021
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