2 Manufacturing Tools Stocks to Watch Despite Industry Headwinds

Industry Overview - The Zacks Manufacturing-Tools & Related Products industry includes companies that develop and distribute various tools and technology solutions, serving multiple sectors such as industrial, commercial, oil & gas, and healthcare [3] - The industry is currently facing challenges due to weakness in the manufacturing sector, with the Manufacturing Purchasing Manager's Index at 46.8% in July, indicating contraction [4] Current Challenges - There is a persistent weakness in the manufacturing sector, with the New Orders Index also in contraction at 47.4% for four consecutive months [4] - Rising input costs and supply chain issues are negatively impacting profitability, leading to increased logistics expenses [5] Strategic Responses - Industry participants are focusing on cost-control measures and investments in product development to remain competitive [2] - Companies are implementing cost management initiatives, including streamlining operations and optimizing supply networks [5] Investment and Growth Potential - Continuous investment in product development and innovation is expected to drive long-term growth, despite the potential for highly-leveraged balance sheets [6] - Stanley Black & Decker, Inc. and Lincoln Electric Holdings, Inc. are highlighted as companies well-positioned to navigate current market challenges [2][11] Performance Metrics - The Zacks Manufacturing-Tools & Related Products industry has underperformed compared to the broader sector and the S&P 500, with a 7.6% appreciation over the past year versus 14.5% and 23% for the sector and S&P 500, respectively [9] - The industry is currently trading at a forward P/E ratio of 20.52X, slightly below the S&P 500's 21.49X but above the sector's 19.00X [10] Company Highlights - Stanley Black & Decker has shown resilience with better-than-expected results in the last four quarters and a 20.3% average earnings surprise [12] - Lincoln Electric is experiencing improving orders and strong backlogs, with a focus on automation solutions and new technologies [13][14]