3 Best Stocks to Buy for Improving Labor Supply Conditions in Q4

stocks to buy - 3 Best Stocks to Buy for Improving Labor Supply Conditions in Q4

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One of the things we need to consider when looking for some of the best stocks to buy is that the U.S. labor market is recovering.

The number of Americans filing claims for jobless benefits fell to its lowest level in 18 months in early September, and economists seem to agree that labor shortages are becoming a growing problem as companies look to fill vacant positions coming out of the pandemic.

Demand for workers is so great that it is helping to push the U.S. minimum wage up closer to the $15 per hour that lawmakers in Washington, D.C. have been calling for this year. And as the labor market strengthens in tandem with the economy, a number of companies are positioned to benefit.

Here are the three best stocks to buy for improving labor supply conditions as we head into the fourth quarter of the year.

  • U.S. Steel (NYSE:X)
  • Boeing (NYSE:BA)
  • Deere & Co. (NYSE:DE)

Best Stocks to Buy: U.S. Steel (X)

a steel frame for a building
Source: Shutterstock

X definitely marks the spot when it comes to improving labor conditions and U.S. Steel. The manufacturer of steel products employs nearly 25,000 people today.

As the second-largest steel producer in America after Nucor Corp. (NYSE:NUE), U.S. Steel is well-positioned to not only benefit from the economic reopening as it gathers strength but also to benefit from President Biden’s $1.4 trillion in spending on infrastructure renewal across the country. 

Signs are already emerging of just how strong U.S. Steel is feeling coming out of the pandemic. The company just announced that it will spend $3 billion to build a brand new steel mill that will be capable of producing three million tons of flat-rolled steel products per year.

Buoyed by record-high prices, U.S. Steel says it plans to begin construction on the new mill in the first half of 2022 at a location that will likely be in either Illinois or Indiana. The new mill should be up and running by 2024.

X stock has rallied 38% year-to-date on strong steel prices and improving economic conditions. The shares currently trade at $23.68.

Boeing (BA)

Image of Boeing (BA) airplane in a hanger.
Source: Alex JW Robinson / Shutterstock.com

Another labor-intensive company is aircraft manufacturer Boeing. The company employs more than 140,000 people at its offices and manufacturing sites across the U.S. and abroad.

While Boeing experienced reputational and financial damage after its 737 MAX aircraft were grounded worldwide following two fatal crashes in 2018 and 2019, the airplanes are certified to fly again in most of the world.

Now orders are resuming at a strong clip. The operational turnaround has enabled BA stock to rise 27% in the past year to now trade at $213 per share.

Investors should keep in mind that Boeing today has a duopoly in the airliner industry. The U.S. company is one of only two in the world that builds commercial passenger aircraft.

The other company is Boeing’s arch-rival Airbus  (EPA:AIR) of France. The market share between the two companies currently breaks down to a 60/40 split in Airbus’ favor.

However, Boeing is in the process of bouncing back. At the end of June, Boeing reported that it had a commercial backlog of aircraft orders worth $285 billion. As the company continues to recover, so should its share price.

Best Stocks to Buy: Deere & Co. (DE)

Deere equipment in harvested field
Source: Deere & Company

Deere & Co., which makes the popular line of green and yellow colored agriculture, construction and forestry machinery and equipment, is another company that is poised to benefit from the economic reopening and infrastructure spending.

As American farming and construction go into overdrive in the coming years, Deere & Co.’s nearly 70,000 employees should work overtime to meet demand and churn out the machinery that companies all over the world rely on.

DE stock has had a strong run in 2021, up 30% on the year at $349.18 per share. The company announced at the end of August that it is rewarding shareholders by raising its quarterly dividend 17% to $1.05 per share.

The quarterly dividend had previously been set at $0.90 a share. Deere & Co. has also been reporting record earnings this year. For its most recent quarter, the company reported that its revenues rose 29% to $11.5 billion, an annualized increase of 27%, while net income rose by 106% year-over-year to $1.67 billion.

Earnings per share more than doubled to $5.32 compared to $2.57 for same period of 2020. Deere & Co. stock is a buy.

Disclosure: On the date of publication, Joel Baglole held a long position in X stock. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

Joel Baglole has been a business journalist for 20 years. He spent five years as a staff reporter at The Wall Street Journal, and has also written for The Washington Post and Toronto Star newspapers, as well as financial websites such as The Motley Fool and Investopedia.


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