Industry is making a comeback in the United States. As the economy begins to gain traction, companies that make stuff are beginning to do very well. The factories are smarter than ever before, more can be made with less labor, and productivity is at all-time highs in the industrial segment of our economy. That’s great news for industrial stocks.
December was the fifth consecutive month that industrial production rose in the United Sates, and it was the strongest quarter for industrial activity since 2010. Industrial production gained 6.8% in the past three months of the year, and many economists think it’s going to continue for a while. U.S. factories will be busy turning out parts, appliances, cars and appliances as consumers spend a little more and international demand continues to increase.
In short: Owing those industrial stocks that have the very best fundamentals should turn out very well for investors. That’s why we have Portfolio Grader — to help you separate the overhyped stocks from the ones building great fundamentals.
ARC Group Worldwide (ARCW)
One of the best-performing industrial stocks in the past year, ARC Group Worldwide (ARCW) manufactures and sells precision components, flanges, fittings, and wireless equipment in North America and Europe. The company focuses on precision components, making small precision metal components that are in a wide range of products including aircraft, cars, medical devices and firearms.
It also makes flanges and fittings used be the petroleum industry, valve manufacturers, as well as pump and compressor manufacturers. The company’s wireless division makes hardware used in broadband and other wireless networks, and ARCW added a 3D printing division at the end of last year.
Business has been great for the company, with earnings growth of more than 25% annually for the past five years. ARCW stock has exploded this year and is up more than 400% in the past year. Portfolio Grader just upgraded ARCW stock to an “A” in December, and the stock is a “strong buy” at the current price.
Gentherm (THRM) isn’t one of the most well-known industrial stocks, but the northern part of the country uses many of its products. The company makes heating, cooling, and ventilating devices for the automotive markets. These products include heated seats, heating systems and temperature regulated cup holders.
The company has seen explosive earnings growth this year, with profits up more than fivefold. Sales growth for the past five years has been greater than 50% annually as more people prefer hot coffees and warm seats for that morning commute. THRM stock was upgraded to an “A” two weeks ago by Portfolio Grader and is a “strong buy” at the current price.
Core Molding Technologies (CMT)
Core Molding Technologies (CMT) makes sheet molding compounds and molds fiberglass reinforced plastics. Its products are used in a wide range of industries, including medium- and heavy-duty trucks, marine, automotive, agriculture and construction.
CMT is one of the most reliable industrial stocks out there. The company has experienced solid growth, with average annual earnings gains of more than 20%. In the third quarter of 2013, CMT stock saw earnings jump by more than 62%. This type of superior fundamental performance will always get noticed by Portfolio Grader, and the stock was upgraded to an “A” back in November. CMT stock is a “strong buy” at the current price.
Louis Navellier is the editor of Blue Chip Growth.