5 Stocks to Buy on Record Rise in Industrial Production

GEF ABB DE WOR HCCI

Industrial production staged a strong rebound in December with unexpectedly warm weather leading to an increase in utility output over the month. Manufacturing output also increased, brightening the outlook for a sector which had remained embattled over nearly all of last year.

Increase Highest in 2 Years

With the new administration set to introduce new policies to support the sector and industry as a whole, better times are surely in the offing. Picking stocks related to industrial production makes for a smart choice at this time.

According to the Federal Reserve, industrial production increased by 0.8% in December, higher than the consensus estimate of a 0.7% increase. This was the highest increase in percentage terms since 2014. This substantial increase in output follows a decline of 0.7% in November, revised further downward from the initial estimate of a fall of 0.4%.

Additionally, capacity utilization increased from 74.9% in November to 75.5%. An increase of 6.6% in utilities output was the primary driver behind last month’s gains.  Even though mining output remained unchanged, manufacturing output increased by 0.2%. Production also experienced a year-over-year increase of 0.5%.

Positive Trend to Continue

According to several economists, despite the volatility observed in utility output, the overall trend for the sector has improved. Apart from utilities, other manufacturing sectors also exhibited gains over December. Motor vehicles, consumer goods and business equipment all witnessed an uptick in production.

A brighter outlook is in keeping with ISM manufacturing data released earlier this month. The  ISM  manufacturing  index  rose  from  53.2%  in  November  to  54.7%  in  December,  reaching  its  highest settlement in the last two years. Additionally, employment for the sector increased by 17,000 last month while hours worked by workers involved in production increased by 0.4%. 

Our Choices

Industrial production has affected a crucial turnaround in December. Economists and analysts alike feel that the tide has turned for the sector and the new administration’s policies can only improve its outlook further.

This is where our VGM score comes in. Here V stands for Value, G for Growth and M for Momentum and the score is a weighted combination of these three scores. Such a score allows you to eliminate the negative aspects of stocks and select winners. However, it is important to keep in mind that each Style Score will carry a different weight while arriving at a VGM score. Adding stocks from the sector to your portfolio makes for a prudent move at this point. However, picking winning stocks may be difficult.

We have narrowed down our search to the following stocks based on a good Zacks Rank and VGM score.

Heritage-Crystal Clean, Inc (HCCI - Free Report) concentrates on servicing the automotive repair, commercial and industrial marketplaces.

Heritage-Crystal Clean has a Zacks Rank #1 (Strong Buy) and a VGM Score of A. The company has expected earnings growth of more than 100% for the current year. The stock has returned 60.4% over the last one year, outperforming the Zacks Pollution Control Market sector, which has gained 54.8% over the same period.

ABB Ltd. (ABB - Free Report) is a leading power and automation technology company, offering a wide range of products systems, solutions and services that are designed to boost industrial productivity, power-grid reliability as well as energy efficiency.

ABB has a Zacks Rank #1 and a VGM Score of B. The company has expected earnings growth of 13.3% for the current year. Its earnings estimate for the current year has improved by 4.5% over the last 30 days. The stock has returned 39.3% over the last one year, outperforming the Zacks Manufacturing - Electronics  Market sector, which has gained 39.1% over the same period.

Deere & Company (DE - Free Report) is engaged in the production and distribution of agricultural and forestry equipment, construction equipment and engines worldwide.

Deere has a VGM Score of B. The forward price-to-earnings (P/E) ratio for the current financial year (F1) is 24.03, lower than the industry average of 24.56. The stock has returned 46.2% over the last one year, outperforming the Zacks Manufacturing - Farm Equipment Market sector, which has gained 40.8% over the same period. The stock has a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Greif, Inc. (GEF - Free Report) is a leading global producer of industrial packaging products and services with manufacturing facilities located in over 50 countries.

Greif has a Zacks Rank #2 (Buy) and a VGM Score of A. The company has expected earnings growth of 21.9% for the current year. The stock has returned 102.1% over the last one year, outperforming the Zacks Containers - Metal and Glass Market sector, which has gained 22.2% over the same period.

Worthington Industries, Inc. (WOR - Free Report) is a leading diversified metal processing companies.

Worthington Industries has a Zacks Rank #2 and a VGM Score of A. The company has expected earnings growth of 31.9% for the current year. It has a P/E (F1) of 14.35, which is lower than the industry average of 14.82. The stock has returned 68.8% over the last one year, outperforming the Zacks Metal Products - Procurement and Fabrication  Market sector, which has gained 58% over the same period.

Zacks' Top 10 Stocks for 2017

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by Swarup Gupta

Source: https://www.zacks.com/stock/news/246114/5-stocks-to-buy-on-record-rise-in-industrial-production

This Could Be One Of 2015'S Best Turnaround Stocks

In the world of investing, winners stay in the spotlight while laggards get pushed into the shadows.

Often times, these stocks get pushed off the radar as investors brace for a period of operational headwinds. Yet as those headwinds abate, opportunity knocks.

That's the set-up in place for Itron, Inc. (Nasdaq: ITRI), one of the world's leading providers of water, electric and gas meters for use in homes, commercial buildings and industrial settings.The company's share price slid nearly 15% since February 2013, while the S&P 500 has surged more than 35%.

To be sure, Itron has been through the ringer, as long-term contracts expired, new contract signings have been postponed and public spending on infrastructure has lagged. The company's revenue base shrank from $2.43 billion in 2011 to an estimated $1.95 billion this year. A lack of profits in three of the past five years surely impacted shares as well.

	2009	2010	2011	2012	2013
Revenue (billions)	$1.7	$2.3	$2.4	$2.2	$2.0
Net Income (millions)	-$2	$105	-$510	$108	-$147

Despite the company's 2014 headwinds, I think Itron is turning the corner and could be poised for a nice run in 2015 and beyond.

Growing Some Smarts

The meter business has steadily progressed with the times, as has Itron's product line-up.

Four decades ago, the company mainly sold low-tech electrical meters that required a periodic visit from a meter reader.

Since then, Itron built a line of advanced meters with a one-way communication module that collects and stores utility usage data. The results can be transmitted to a mobile device or a fixed network used in the analysis of resource usage and billing.

The company's highest-tech offerings, smart meters, provide the most functions. These include collecting and storing utility usage data over time, two-way communication enabling remote operation and data transmission and interfaces with other devices like in-home displays, smart thermostats and much larger interconnected networks.

Itron also sells software packages that help consumers and building managers optimize energy use in homes and commercial settings. It's working with utility companies, too, to develop integrated smart-grid technologies that could help revolutionize water and power management on a broad scale.

Simply put, Itron is right in the thick of the growing movement toward cleaner, more efficient and more sustainable energy and resource use.

Itron's recent problems stem from the fact that demand in the United States for advanced meters has stalled. The company is attempting to foster growth by tapping international markets.

Some of the best growth opportunities are in Western Europe, particularly Spain, France and the U.K., where demand for smart meters will total about 93 million units through 2020, according to projections by market research firm Navigant Research. Together, China, India and Japan will need hundreds of millions of smart meters during the next decade or so.

Globally, the smart meter market will expand 50% to $6.6 billion in 2023 from $4.4 billion last year, Navigant estimates.

Projected Smart Meter Demand

Country	Units Needed (millions)
Japan (through 2024)	80
Spain, France, UK (through 2020)	93
India (2017-2027)	150
China (through 2020)	377

Source: Navigant

Itron is now seeing modest revenue gains after a series of declines in prior years.

Looking ahead, I expect international markets will deliver a boost to Itron's financial performance as the firm ramps up overseas sales efforts.

On November 26, for example, the firm announced a deal to provide smart meters for AES Eletropaulo, a major Brazilian utility with 6.8 million customers that recently began a smart grid project in the city of Barueri.

Itron has been expanding its Asian presence for several years. It opened a high-tech meter manufacturing facility in Southeastern China in 2012 to facilitate the country's efforts to streamline energy use.

In India, a 2013 contract with the infrastructure development firm SPML was established to provide 90,000 advanced meters for several areas of New Delhi, India's capital city. Itron's water meter factory in the Dehradun district of India handled the manufacturing.

Backlog figures highlight a clear positive trend. The company booked $514 million in new orders in the third quarter (up from $478 million in the second quarter), helping total backlog to rise sequentially, to $700 million from $675 million.

Those gains are being muted by a global restructuring effort which will cost Itron $65-to-$75 million during the next few years. But after that process is complete in 2016, the company will save about $40 million per year in operating expenses, according to management.

Risks To Consider: Itron's financial performance can be choppy at times because the firm is so closely tied to the utility sector, where meter demand can vary substantially with factors like construction trends, availability of government subsidies and overall economic conditions.

Action To Take --> With its business recovering, Itron is well-positioned to meet consensus projections for earnings per share of $1.63 this year, followed by 11%-a-year growth for the ensuing five years. Assuming a more conservative price-to-earnings ratio of 25 -- the industry average is currently 29 -- this implies about 70% upside potential for the stock through 2019. Investors seeking a likely turnaround play for 2015 and beyond should consider Itron.

By Tim Begany

Source:http://www.streetauthority.com/value-investing/could-be-one-2015s-best-turnaround-stocks-30494899best

5 high-performing industrial stocks to watch

If stocks continue to climb amid increased risk appetite, this may not be a bad place to be for the rest of the year

Despite actually being down on the year, industrial stocks led the market on Monday, climbing better than 0.50 percent on the session.

Year to date, however, the sector has lost more than 1 percent compared to a gain of more than 6 percent for the Standard & Poor's 500 Index ($INX -0.02%). 

Normally, investors want to own industrial stocks in a cyclical upturn, and it is not completely clear why the sector has been underperforming in recent months.

If the S&P continues to climb amid increased risk appetite, however, this may not be a bad place to be for the remainder of the year. Although the sector as a whole has fallen slightly on the year, there are a number of industrial names that have soared so for in 2014.

Here is a closer look at five of the top performers in the industrial sector:

Headwaters (HW +0.57%)

This Utah-based building products company has surged more than 42 percent in 2014 on the back of a recovery in construction spending.

Over the last month alone, the stock has appreciated a little less than 9 percent, giving the company a market cap of just over $1 billion. Wall Street analysts are estimating that the company's revenue will grow by 12 percent in fiscal 2014 to $786.46 million. 

The following year, sales are expected to be up 8.6 percent to $853.74 million. The stock currently trades at a forward P/E of just over 25. The company does not currently pay a dividend.

Matrix Service (MTRX +7.09%)

This lightly traded stock is likely under the radar of many investors. Matrix Service provides engineering, fabrication, construction and maintenance services primarily to oil, gas, mining and minerals companies. Year-to-date the stock has jumped around 36 percent, making it a top performer in the industrial sector.

Over the last year, shares have nearly doubled. The reason for the big move in MTRX has been aggressive revenue growth in recent quarters. For the June quarter, Wall Street analysts are projecting growth of nearly 51 percent. 

For the fiscal year, sales are expected to grow by almost 43 percent. At current levels, the shares trade at a forward P/E of 19 and a PEG ratio of 2.27. The company does not currently pay a dividend and has a market cap of $880 million.

Patrick Industries (PATK -0.04%)

Patrick is a provider of component parks to the recreational vehicle (RV) market and also provides building products and materials to the manufactured housing industry. The small-cap stock has been an elite performer in 2014, climbing around 38 percent.

Over the last 52-weeks, PATK has more than doubled, giving the company a current market-cap of $426 million. The stock currently trades at a forward P/E of just under 13 and a PEG ratio of 0.96. In recent years, the company has made a number of acquisitions which have added around $170 million in sales. On Monday, the stock rose another 4 percent after Patrick announced the acquisition of three small painting companies.

Texas Industries (TXI +1.99%)

This company is a mid-cap construction supply firm located in Dallas, Texas. The stock is currently sitting near all-time high levels as sales have risen in each of the last three fiscal years.

In fiscal 2013, Texas Industries reported revenue of nearly $700 million and analysts are projecting that the company will record sales of over $900 million, representing year over year growth of over 30 percent. 

The stock has also been buoyed over the last three months by increased earnings estimates for the May quarter, with EPS estimates rising from $0.35 to $0.44. During that period, shares have climbed roughly four percent. At current levels, the company has a market-cap of $2.58 billion.

Zebra Technologies (ZBRA -0.11%)

Zebra is a nearly $4 billion manufacturer of specialty printing devices. The stock is currently sitting near all-time high levels after climbing better than 73 percent over the last 52-weeks.

Year to date, the shares have added almost 46 percent. The company has been able to grow its top-line sales over the last four fiscal years and analysts are projecting sales growth of around 13 percent to $1.17 billion in fiscal 2014. 

Over the last three months, EPS estimates for the current quarter have moved up $0.03 to $0.82. During this time period, the shares have risen around 12 percent. At current levels, the stock trades at a forward P/E of 18.65. Zebra does not currently pay a dividend.

By Scott Rubin

Source:http://money.msn.com/top-stocks/post--5-high-performing-industrial-stocks-to-watch