The industrial sector has performed impressively so far in 2019 despite the fact that the U.S. economy is still reeling under trade-related jitters. A prolonged trade tussle with China has resulted in a global economic downturn. The U.S. economy also lost its pace although it is growing for the 11th year on the trot. In spite of these negatives, several industrial stocks have skyrocketed year to date.
Tarde War Hurts Business Spending
Lingering trade conflict with China has resulted in tariff war wherein duties have been levied on hundreds of billion dollars on each other goods. The U.S. government has already levied 25% tariff on more than $300 billion of Chinese goods mostly used as cheap inputs for the technology and industrial sectors. On the other hand, China imposed tariffs on more than $100 billion U.S. products mainly from the agricultural sector.
Imposition of tariff on China-made low-cost intermediary products raised the input cost of U.S. manufacturers. Consequently U.S. business spending dropped significantly in 2019. The Institute of Supply Management reported that U.S. manufacturing activities contracted for three consecutive months from August to October. Moreover, the latest data on U.S. industrial production showed that it declined 0.4% in September.
Trade-related conflict with China continues despite President Trump’s assurance about substantial progress of a partial deal. Besides technology, the industrial sector also bore the brunt of trade war owing to higher input costs and lower export demand. Both are the direct results of a prolonged trade conflict.
Industrial Sector Shines Despite Headwinds
Despite several headwinds, industrial stocks have performed quite strongly so far this year. The Industrial Select Sector SPDR (XLI), one of the 11 broad sectors of the S&P 500 Index, has rallied 27% year to date, outpacing the benchmark index’s gain of 23.4%. In fact, the industrial sector is so far the second-best performer of the S&P 500 Index after the Technology Select Sector SPDR (XLK) that has surged 39% year to date.
Our Top Picks
In line with this impressive trend, we have narrowed down our search to five industrial stocks that have skyrocketed in 2019 and still have upside left. Each of our picks carries a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
CIRCOR International Inc. (CIR - Free Report) designs, manufactures and markets engineered products and sub-systems worldwide. It operates through three segments: Energy, Aerospace and Defense, and Industrial.
The company has an expected earnings growth rate of 6.2% for the current year. The Zacks Consensus Estimate for the current year has improved by 4.2% over the last 30 days. The stock has jumped 97.7% year to date.
H&E Equipment Services Inc. (HEES - Free Report) is one of the largest integrated equipment services companies in the United States. It operates in five segments: Equipment Rentals, New Equipment Sales, Used Equipment Sales, Parts Sales, and Repair and Maintenance Services.
The company has an expected earnings growth rate of 21.6% for the current year. The Zacks Consensus Estimate for the current year has improved by 4.9% over the last 30 days. The stock has jumped 80% year to date.
SiteOne Landscape Supply Inc. (SITE - Free Report) is engaged in the wholesale distribution of landscape supplies in the United States and Canada. It provides a selection of nearly 120,000 stock keeping units, including irrigation supplies, fertilizer and control products, landscape accessories, nursery goods, outdoor lightings, and ice melt products, as well as hardscapes, such as pavers, natural stones and blocks.
The company has an expected earnings growth rate of 15.6% for the current year. The Zacks Consensus Estimate for the current year has improved 11.4% over the last 30 days. The stock has soared 66.8% year to date.
Tennant Co. (TNC - Free Report) designs, manufactures and markets floor cleaning equipment worldwide. It offers a suite of products, including floor maintenance and outdoor cleaning equipment, detergent-free and other sustainable cleaning technologies, aftermarket parts and consumables, equipment maintenance and repair services, specialty surface coatings, and asset management solutions.
The company has an expected earnings growth rate of 29.8% for the current year. The Zacks Consensus Estimate for the current year has improved by 5.2% over the last 30 days. The stock has surged 48.8% year to date.
Northwest Pipe Co. (NWPX - Free Report) manufactures engineered welded steel pipe water systems in North America. It operates through two segments: Water Transmission business and Tubular Products business.
The company has an expected earnings growth rate of 15.8% for the current year. The Zacks Consensus Estimate for the current year has improved by 46.7% over the last 30 days. The stock has climbed 39.5% year to date.
5 Stocks Set to Double
Each was hand-picked by a Zacks expert as the #1 favorite stock to gain +100% or more in 2020. Each comes from a different sector and has unique qualities and catalysts that could fuel exceptional growth.
Most of the stocks in this report are flying under Wall Street radar, which provides a great opportunity to get in on the ground floor.
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