4 Industrial Manufacturing Stocks to Gain From Enhanced Supply Chains

Industry Overview - The Zacks Manufacturing – General Industrial industry is expected to grow due to easing supply-chain disruptions, despite a slowdown in manufacturing activities [1] - Key players in the industry include Parker-Hannifin Corporation, IDEX Corporation, Applied Industrial Technologies, Inc., and Flowserve Corporation, which are likely to capitalize on current opportunities [1][2] Current Trends - The manufacturing sector has shown persistent weakness, with the Manufacturing Purchasing Manager's Index at 49.1% in January, indicating contraction for the 15th consecutive month; however, new orders increased by 4.7 percentage points from December 2023, suggesting gradual improvement [3] - Supply-chain disruptions are easing, particularly in electronic components, with the Supplier Deliveries Index reflecting faster deliveries for the 16th straight month in January, which is expected to support growth in 2024 [4] - Companies are focusing on acquisition-based growth strategies to expand their networks and product offerings, which helps mitigate risks associated with reliance on a single market [5] Industry Performance - The Zacks Manufacturing – General Industrial industry ranks 71, placing it in the top 28% of over 250 Zacks industries, indicating bright near-term prospects [6] - Over the past year, the industry has appreciated by 15%, outperforming the broader sector but lagging behind the S&P 500 Index, which grew by 20.8% [7] Valuation Metrics - The industry is currently trading at a forward 12-month Price-to-Earnings (P/E) ratio of 21.15X, higher than the S&P 500's 20.52X and the sector's 17.21X [8] Notable Companies - Parker-Hannifin Corporation: Benefits from steady demand and higher orders, with a 45.3% share price increase over the past year; earnings estimates for fiscal 2024 have improved by 2.7% [10][11] - IDEX Corporation: Expected to benefit from a diversified business structure and recent acquisition; shares have declined by 2.5% over the past year but recovered by 3.8% in the past month [12] - Applied Industrial Technologies, Inc.: Anticipates 1-3% year-over-year sales growth for fiscal 2024, with a 25.7% share price increase over the past year [13] - Flowserve Corporation: Thriving due to strong manufacturing and aftermarket activity, with a 17.6% share price increase over the past year [14]