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4 Stocks to Buy as Durable Goods Orders Rebound in March
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Orders for U.S.-made factory goods rebounded in March after two straight months of decline. While soaring commodity prices have made spending difficult for consumers, higher interest rates are making raw materials expensive. However, the latest report from the Census Bureau comes as inflation is showing signs of easing lately.
The manufacturing sector has been struggling amid price pressures but higher orders for transportation equipment helped boost orders for durable goods in March. Given this scenario, stocks like Hubbell Incorporated (HUBB - Free Report) , Parker-Hannifin Corporation (PH - Free Report) , Ingersoll Rand Inc. (IR - Free Report) and Flowserve Corporation (FLS - Free Report) are expected to benefit in the near term.
Durable Goods Order Jump
On Apr 26, the Census Bureau said that orders for goods made in U.S. factories jumped a solid 3.2% in March or $8.6 billion, surpassing estimates of a 0.8% increase. The rebound follows a 1.2% decline in February.
Excluding defense, orders for new goods increased 3.5% in March. The jump in March was led by a solid increase in orders for transportation equipment.
Orders for transportation equipment also bounced back after monthly declines in January and February. Transportation equipment orders rose $8.1 billion or 9.1% to $97.4 billion.
Excluding transportation, orders for durable goods rose 0.3% in March.
Shipments of manufactured durable goods grew 1.1%, or $2.9 billion, in March to reach $277 billion. This follows a 0.8% decline in February.
New orders for nondefense capital goods jumped $8.4 billion or 10.4% to $89.6 billion in March. Shipments for nondefense goods climbed $3 billion, or 3.6% to $85.8 billion.
The manufacturing sector has been struggling lately amid inflationary pressures. Production at U.S. factories has been declining for the past few months. However, signs of a rebound can finally be seen. The report came days after the Fed said that industrial production rose 0.4% in March, surpassing estimates of an increase of 0.2%. Year over year, industrial production grew 0.5% in March.
Also, capacity utilization, which indicates overall demand and growth in the economy, rose 0.2% to 79.8% in March, surpassing estimates of 79.1%.
The rebound in both industrial production and new orders for durable goods comes as inflation showed signs of easing in February.
The Personal Consumption Expenditures (PCE) Price Index, increased 0.3% in February, beating analysts’ expectations of a rise of 0.4% and but coming in lower than January’s jump of 0.5%
On a year-over-year basis, PCE increased 4.6% in February, slightly lower than the January level. The decline definitely is helping the manufacturing sector as evident from the solid jump in orders for durable goods in March.
Our Choices
Given this scenario, it will be prudent to invest in stocks with a favorable Zacks Rank that are poised to gain from the solid durable goods orders. We narrowed down our search to four such stocks. Each of these stocks 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.
Hubbell Incorporated is engaged in the design, manufacture and sale of electrical and electronic products to commercial, industrial, utility and telecommunications markets. HUBB’s products include plugs, receptacles, connectors, lighting fixtures, high voltage test and measurement equipment, and voice and data signal processing components.
Hubbell Incorporated’s expected earnings growth for the current year is 6.1%. The Zacks Consensus Estimate for current-year earnings has improved 0.4% over the last 60 days. HUBB carries a Zacks Rank #2.
Parker-Hannifin Corporation is a global diversified manufacturer of motion & control technologies and systems. PH provides precision-engineered solutions for a wide variety of mobile, industrial and aerospace markets.
Parker-Hannifin Corporation’s expected earnings growth for the current year is 5.2%. The Zacks Consensus Estimate for current-year earnings has improved 1.3% over the past 60 days. PH presently has a Zacks Rank #2.
Ingersoll Rand Inc. is a global industrial company, with expertise in industrial and mission-critical flow creation technologies. IR came into existence when Gardner Denver Holdings, Inc. acquired the Industrial segment of Ingersoll-Rand plc in February 2020.
Ingersoll Rand’s expected earnings growth for the current year is 7.6%. The Zacks Consensus Estimate for current-year earnings has improved 3.3% over the past 60 days. IR currently sports a Zacks Rank #1.
Flowserve Corporation is a leading manufacturer and aftermarket service provider of comprehensive flow control systems, globally. FLS develops and manufactures precision-engineered flow control equipment, such as pumps, valves and seals, for critical service applications that require high reliability. Flowserve uses its manufacturing platform to offer a broad array of aftermarket equipment services, such as installation, advanced diagnostics, repair and retrofitting.
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4 Stocks to Buy as Durable Goods Orders Rebound in March
Orders for U.S.-made factory goods rebounded in March after two straight months of decline. While soaring commodity prices have made spending difficult for consumers, higher interest rates are making raw materials expensive. However, the latest report from the Census Bureau comes as inflation is showing signs of easing lately.
The manufacturing sector has been struggling amid price pressures but higher orders for transportation equipment helped boost orders for durable goods in March. Given this scenario, stocks like Hubbell Incorporated (HUBB - Free Report) , Parker-Hannifin Corporation (PH - Free Report) , Ingersoll Rand Inc. (IR - Free Report) and Flowserve Corporation (FLS - Free Report) are expected to benefit in the near term.
Durable Goods Order Jump
On Apr 26, the Census Bureau said that orders for goods made in U.S. factories jumped a solid 3.2% in March or $8.6 billion, surpassing estimates of a 0.8% increase. The rebound follows a 1.2% decline in February.
Excluding defense, orders for new goods increased 3.5% in March. The jump in March was led by a solid increase in orders for transportation equipment.
Orders for transportation equipment also bounced back after monthly declines in January and February. Transportation equipment orders rose $8.1 billion or 9.1% to $97.4 billion.
Excluding transportation, orders for durable goods rose 0.3% in March.
Shipments of manufactured durable goods grew 1.1%, or $2.9 billion, in March to reach $277 billion. This follows a 0.8% decline in February.
New orders for nondefense capital goods jumped $8.4 billion or 10.4% to $89.6 billion in March. Shipments for nondefense goods climbed $3 billion, or 3.6% to $85.8 billion.
The manufacturing sector has been struggling lately amid inflationary pressures. Production at U.S. factories has been declining for the past few months. However, signs of a rebound can finally be seen. The report came days after the Fed said that industrial production rose 0.4% in March, surpassing estimates of an increase of 0.2%. Year over year, industrial production grew 0.5% in March.
Also, capacity utilization, which indicates overall demand and growth in the economy, rose 0.2% to 79.8% in March, surpassing estimates of 79.1%.
The rebound in both industrial production and new orders for durable goods comes as inflation showed signs of easing in February.
The Personal Consumption Expenditures (PCE) Price Index, increased 0.3% in February, beating analysts’ expectations of a rise of 0.4% and but coming in lower than January’s jump of 0.5%
On a year-over-year basis, PCE increased 4.6% in February, slightly lower than the January level. The decline definitely is helping the manufacturing sector as evident from the solid jump in orders for durable goods in March.
Our Choices
Given this scenario, it will be prudent to invest in stocks with a favorable Zacks Rank that are poised to gain from the solid durable goods orders. We narrowed down our search to four such stocks. Each of these stocks 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.
Hubbell Incorporated is engaged in the design, manufacture and sale of electrical and electronic products to commercial, industrial, utility and telecommunications markets. HUBB’s products include plugs, receptacles, connectors, lighting fixtures, high voltage test and measurement equipment, and voice and data signal processing components.
Hubbell Incorporated’s expected earnings growth for the current year is 6.1%. The Zacks Consensus Estimate for current-year earnings has improved 0.4% over the last 60 days. HUBB carries a Zacks Rank #2.
Parker-Hannifin Corporation is a global diversified manufacturer of motion & control technologies and systems. PH provides precision-engineered solutions for a wide variety of mobile, industrial and aerospace markets.
Parker-Hannifin Corporation’s expected earnings growth for the current year is 5.2%. The Zacks Consensus Estimate for current-year earnings has improved 1.3% over the past 60 days. PH presently has a Zacks Rank #2.
Ingersoll Rand Inc. is a global industrial company, with expertise in industrial and mission-critical flow creation technologies. IR came into existence when Gardner Denver Holdings, Inc. acquired the Industrial segment of Ingersoll-Rand plc in February 2020.
Ingersoll Rand’s expected earnings growth for the current year is 7.6%. The Zacks Consensus Estimate for current-year earnings has improved 3.3% over the past 60 days. IR currently sports a Zacks Rank #1.
Flowserve Corporation is a leading manufacturer and aftermarket service provider of comprehensive flow control systems, globally. FLS develops and manufactures precision-engineered flow control equipment, such as pumps, valves and seals, for critical service applications that require high reliability. Flowserve uses its manufacturing platform to offer a broad array of aftermarket equipment services, such as installation, advanced diagnostics, repair and retrofitting.