Consumer Durables News

4 Solid Stocks to Buy on Rise in September Durable Goods Orders – November 1, 2022

[ad_1]

Orders for long-lasting goods made in U.S. factories have been on the rise, although rising prices are a concern. Rising prices have made people spend cautiously, but higher demand is still driving orders for consumer durable goods. This saw orders for durable goods jumping month over month in September.

A large chunk of the orders in September was for transportation equipment but overall demand for durable goods has been declining, indicating that inflationary pressures are taking their toll on the manufacturing sector. However, overall demand for consumer goods has been impressive lately. Given this scenario, stocks like Graham Corporation (GHM Free Report) , Hubbell Incorporated (HUBB Free Report) , AZZ Inc. (AZZ Free Report) and Twin Disc, Incorporated (TWIN Free Report) are expected to gain in the near term.

Durable Goods Orders Rise Amid Challenges

The Commerce Department said on Oct 27 that orders for durable goods made in U.S. factories grew $1 billion or 0.4% to $274.7 billion in September. This follows a revised 0.2% gain in August. It was earlier reported that August durable goods orders had declined by 0.2%.

Excluding defense, new orders for durable goods increased an impressive 1.4% in September.

September’s jump can primarily be attributed to higher orders for transportation equipment. Overall orders for transportation equipment rose 2.1% to $90.4 billion. Within the category, the jump in orders for transportation equipment was broad-based.

Orders for automobiles and auto parts increased 2.2% to $61.4 billion in September. The report mentioned that demand for SUVs and large vehicles remained strong, which helped in driving orders. Automakers are also working toward resolving supply-chain problems brought on by the ongoing chip shortage.

Besides, orders for commercial aircraft and parts jumped a whopping 22% to $18.2 billion. However, excluding transportation, new orders for consumer durable goods declined 0.5%.

Higher prices have been posing as the biggest challenge for the manufacturing sector, as people have been spending cautiously and cutting down on expenses.

However, despite the challenges, the sector has been performing well. Overall strong demand has been helping to drive orders and, eventually, sales. Shipments of manufactured durable goods climbed by $0.7 billion or 0.3% to $274.2 billion in September. This follows a 1.3% jump in August.

Shipments of manufactured durable goods have now been up in 16 of the previous 17 months. Moreover, inventories of manufactured durable goods in September rose $1.2 billion or 0.2% to $488.7 billion from the previous month.

People spent more on goods and less on services during the peak of the pandemic but they have once again started spending more on services as the economy is back to functioning at its optimum level. Even then, there remains a significant demand for goods, which is boosting orders for durable goods.

Our Choices

Given this scenario, it will be prudent to invest in stocks with a favorable Zacks Rank that are poised to gain from 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.

Graham Corporation designs and builds vacuum and heat transfer equipment for process industries and energy markets worldwide. GHM’s products include steam jet ejector vacuum systems and liquid ring vacuum pumps, surface condensers, Heliflows, water heaters, and various types of heat exchangers.

Graham Corporation’s expected earnings growth for the current year is more than 100%. The Zacks Consensus Estimate for current-year earnings has improved more than 100% over the past 90 days. GHM currently has a Zacks Rank #2.

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 27.7%. The Zacks Consensus Estimate for current-year earnings has improved 4.8% over the past 60 days. HUBB at present sports a Zacks Rank #1.

AZZ Inc. is a global provider of metal coating services, welding solutions, specialty electrical equipment and highly engineered services to the markets of power generation, transmission, distribution and industrial in protecting metal and electrical systems used to build and enhance the world’s infrastructure.

AZZ Inc.’s expected earnings growth for the current year is 65.3%. The Zacks Consensus Estimate for current-year earnings has improved 44.1% over the past 60 days. AZZ at present sports a Zacks Rank #1.

Twin Disc, Incorporated designs, manufactures and sells heavy-duty off-highway power transmission equipment. Products offered by TWIN include hydraulic torque converters; power-shift transmissions; marine transmissions and surface drives; universal joints; gas turbine starting drives; power take-offs and reduction gears; industrial clutches; fluid couplings and control systems.

Twin Disc’s expected earnings growth for the current year is 95%. The Zacks Consensus Estimate for current-year earnings has improved 5.4% over the past 60 days. Presently, TWIN carries a Zacks Rank #1.



[ad_2]

Source link