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5 Manufacturing Stocks to Buy Despite Mixed PMI in May

Industry Overview - The U.S. manufacturing sector is still in contraction, with the ISM manufacturing PMI at 48.7% in May, down from 49.2% in April, indicating ongoing challenges since October 2022, except for a brief recovery in March 2023 [1] - The Zacks Manufacturing – General Industrial industry is positioned for growth due to easing supply-chain disruptions, despite a slowdown in manufacturing activities [1] - The General Industrial industry has provided 18.2% returns over the past year and is currently in the top 26% of the Zacks Industry Rank, suggesting potential outperformance in the next three to six months [2] Company Insights - Applied Industrial Technologies Inc. (AIT): Expected revenue and earnings growth rates of 3% and 5.5% respectively for the year ending June 2025, with a current dividend yield of 0.8% [6] - Crane Co. (CR): Anticipated revenue and earnings growth rates of 9.9% and 16.3% respectively for the current year, with a current dividend yield of 0.6% [7] - Ingersoll Rand Inc. (IR): Expected revenue and earnings growth rates of 5.4% and 10.5% respectively for the current year, with a current dividend yield of 0.1% [8] - Xylem Inc. (XYL): Projected revenue and earnings growth rates of 16.4% and 12.4% respectively for the current year, with a current dividend yield of 1.1% [9] - Flowserve Corp. (FLS): Expected revenue and earnings growth rates of 5.8% and 26.7% respectively for the current year, with a current dividend yield of 1.8% [10] Market Dynamics - Supply-chain disruptions, particularly regarding electronic components, have improved this year, supporting growth for industrial manufacturing companies [3] - Anticipated reductions in raw material costs and a surge in e-commerce are expected to benefit the industry [3] - Companies are focusing on digitization to enhance operational productivity, product quality, and reduce costs [3] - An acquisition-based growth strategy is being employed by industry participants to expand networks and product offerings [4]