According to the U.S. Industrial Outlook report released in December 2013
by Manufacturers Alliance for Productivity and Innovation (MAPI), U.S.
manufacturing production will increase 3.1% in 2014 and 4.1% in 2015, outperforming
GDP growth, which MAPI estimates will be 2.6% in 2014 and 3.2% in 2015.
We note that manufacturing production grew 2.1% during 2013.
MAPI reports that consumer-driven manufacturing growth is likely to remain
stable but business investment–driven manufacturing will accelerate overall
production growth. With the Eurozone coming out of a recession, export
activity will likely pick up boosting business sentiment. MAPI Forecasts
that high-tech production (computers and electronic products) will grow
6.8% in 2014 after growing 4.4% during 2013, while non-high-tech or traditional
manufacturing will grow 3% in 2014 following the 2% growth during 2013.
Medical equipment production is likely to post high growth due to aging
trends and the Affordable Care Act.
Ubika Research has shortlisted ten U.S. manufacturing stocks which appear
to be currently undervalued and are expected to report strong earnings
growth during 2014, according to Bloomberg polls. These stocks are currently
trading at relatively low forward Price-to-Earning (P/E), Price to Book
(P/B) and Price to Cash flow (P/CF) multiples in comparison to industry
average. These stocks are expected to provide high return on equity during
2014, based on the consensus estimates provided by Bloomberg. We note these
stocks have recorded significant gains during 2013 and also in the past
three months with daily average traded volume in excess of 100,000.
|
Company Name |
Exchange |
Ticker |
Market Cap |
Last Price |
3- Months |
3-Months |
Price Return |
Sales Growth |
EPS Growth (2014E) |
PE Ratio (2014E) |
P/B Ratio (2014E) |
P/CF Ratio (2014E) |
ROE (2014E) |
|
TAL International Group Inc |
NYSE |
TAL |
1,828.2 |
54.01 |
395,326 |
17.5% |
57.6% |
9.2% |
36.0% |
13.0 |
2.7 |
5.4 |
21.5% |
|
Greenbrier Cos Inc |
NYSE |
GBX |
893.8 |
31.84 |
347,741 |
28.3% |
103.1% |
16.6% |
31.7% |
12.1 |
2.1 |
7.6 |
20.4% |
|
Alliant Techsystems Inc |
NYSE |
ATK |
3,834.0 |
120.39 |
262,030 |
23.5% |
96.4% |
8.0% |
11.4% |
13.0 |
2.7 |
10.0 |
19.3% |
|
Visteon Corp |
NYSE |
VC |
3,972.9 |
81.66 |
493,347 |
9.6% |
52.2% |
8.0% |
93.6% |
14.6 |
2.7 |
7.1 |
18.9% |
|
Fabrinet |
NYSE |
FN |
660.0 |
19.00 |
143,344 |
13.4% |
56.5% |
9.3% |
15.7% |
11.4 |
1.7 |
8.4 |
18.1% |
|
MasTec Inc |
NYSE |
MTZ |
2,509.6 |
32.49 |
620,084 |
8.2% |
31.2% |
14.2% |
29.9% |
17.6 |
2.4 |
9.0 |
16.0% |
|
Trinity Industries Inc |
NYSE |
TRN |
4,228.6 |
54.15 |
1,282,759 |
23.5% |
52.2% |
14.0% |
46.6% |
11.7 |
1.8 |
7.5 |
16.0% |
|
Kennametal Inc |
NYSE |
KMT |
3,952.3 |
50.40 |
570,828 |
13.7% |
30.2% |
8.5% |
16.0% |
17.0 |
2.3 |
11.1 |
12.7% |
|
Korn/Ferry International |
NYSE |
KFY |
1,263.0 |
25.53 |
384,997 |
17.9% |
64.7% |
15.4% |
33.5% |
17.4 |
1.7 |
13.2 |
10.2% |
|
Ceco Environmental Corp |
NASDAQ |
CECE |
420.0 |
16.42 |
178,954 |
12.9% |
62.3% |
45.9% |
40.9% |
17.9 |
2.2 |
5.6 |
10.0% |
Source: Bloomberg; P/B – Price to Book
P/CF- Price to Cash Flow; ROE – Return on Equity
Company Description:
TAL International Group Inc (NYSE: TAL)
TAL International Group, Inc. acquires, leases, re-leases, and sells intermodal
containers. The containers are used to transport freight by ship,
rail, or truck.
Greenbrier Cos Inc (NYSE: GBX)
The Greenbrier Companies, Inc. supplies transportation equipment and services
to the railroad and related industries. The company’s manufacturing segment
produces railcars and marine vessels. Greenbrier also provides repair
and refurbishment for intermodal and conventional railcars. In addition,
the company provides complementary leasing and services activities.
Alliant Techsystems Inc (NYSE: ATK)
Alliant Techsystems Inc. develops and supplies advanced weapon and space
systems. The company’s offerings include advanced missile systems, precision-guided
munitions, electronic warfare and aircraft integration programs, satellite
components and sub-systems, military ammunition and gun systems, and supplies
ammunition to law enforcement agencies.
Visteon Corp (NYSE: VC)
Visteon Corporation supplies automotive systems, modules, and components
to vehicle manufacturers and the aftermarket on a worldwide basis. The
company manufactures products such as climate control systems, electronics,
interiors, and lighting.
Fabrinet (NYSE: FN)
Fabrinet offers outsourced process engineering and manufacturing services.
The company contracts to manufacture optical communications, automotive,
industrial, and imaging components, sub-assemblies, and modules for its
original equipment manufacturer customers.
MasTec Inc (NYSE: MTZ)
MasTec Inc., is a specialty contractor operating across a range of industries.
The company’s activities are the building, installation, maintenance and
upgrade of utility and communications infrastructure, including electrical
utility transmission and distribution, wind-farms, solar farms, other renewable
energy and natural gas infrastructure, wireless, wire-line, etc.
Trinity Industries Inc (NYSE: TRN)
Trinity Industries, Inc. manufactures transportation, construction, and
industrial products. The company’s products include tank and freight railcars,
inland hopper and tank barges, highway guardrail and safety products, ready-mix
concrete, and other products. Trinity also leases railcars and other
products. The company markets its products in the United States and internationally.
Kennametal Inc (NYSE: KMT)
Kennametal Inc. manufactures, purchases, and distributes tools, tooling
systems, and solutions to the metalworking, mining, oil, and energy industries.
The company also manufactures and distributes wear-resistant parts for
a wide range of industries. Kennametal operates worldwide.
Korn/Ferry International (NYSE: KFY)
Korn/Ferry International is a global provider of talent management solutions,
with a presence throughout the Americas, Asia Pacific, Europe, the Middle
East and Africa. The firm delivers services and solutions that help clients
cultivate greatness through the attraction, engagement, development and
retention of their talent.
Ceco Environmental Corp (NASDAQ: CECE)
CECO Environmental Corp. is involved in the air quality management and
pollution control industries. The company manufactures and sells industrial
air filters and filter fabrics, as well as supplies air quality improvement
systems. CECO also provides environmental maintenance, monitoring, and
management services.
