Factory Orders Soar as Manufacturing Rebounds: 5 Winners

Industry Overview - The U.S. manufacturing sector is showing signs of recovery, with new orders for manufactured goods increasing by 1.4% in February after a decline of 3.8% in January, surpassing the consensus estimate of 1% [1] - Year-over-year factory orders rose by 1% in February, driven by significant increases in orders for commercial aircraft (up 24.6%) and motor vehicles (up 0.3%) [1] - The manufacturing PMI rose to 50.3 in March, marking the first reading above 50 since September 2022, ending 16 months of contraction in manufacturing activity [2] Economic Context - The Federal Reserve has raised interest rates by 525 basis points since March 2022 due to high inflation, which has negatively impacted the manufacturing sector that constitutes 10.4% of the economy [2] - Inflation has decreased significantly over the past year, and the Federal Reserve has maintained interest rates since July 2023, with plans to cut rates at least three times by the end of the year [2][3] Company Insights - Caterpillar Inc. (CAT): Expected earnings growth of 0.6% for the current year, with a Zacks Consensus Estimate improvement of 3.5% over the past 60 days; currently holds a Zacks Rank 2 [4][5] - Hubbell Incorporated (HUBB): Expected earnings growth of 7.2% for the current year, with a Zacks Consensus Estimate improvement of 0.6% over the past 60 days; currently holds a Zacks Rank 2 [4][5] - Parker-Hannifin Corporation (PH): Expected earnings growth of 12.5% for the current year, with a Zacks Consensus Estimate improvement of 1.6% over the past 60 days; currently holds a Zacks Rank 2 [4][6] - Applied Industrial Technologies, Inc. (AIT): Expected earnings growth of 8.5% for the current year, with a Zacks Consensus Estimate improvement of 2.5% over the past 60 days; currently holds a Zacks Rank 2 [4][6] - A. O. Smith Corporation (AOS): Expected earnings growth of 6.8% for the current year, with a Zacks Consensus Estimate improvement of 0.5% over the past 60 days; currently holds a Zacks Rank 2 [4][7]