According
to the recent quarterly economic forecast by Manufacturers Alliance for
Productivity and Innovation (MAPI), U.S. manufacturing production is likely to
outpace the overall U.S. economic growth in 2014 on the back of rise in
consumer spending combined with increase in business investment. MAPI predicts
that U.S. manufacturing will increase 3.2% in 2014 and 4.0% in 2015,
outperforming GDP growth, which MAPI estimates will be 2.8% in 2014 and 3.2% in
2015. Manufacturing production grew 2.3% during 2013.
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 2.9% in 2014 following the 2% growth during
2013. Further, MAPI forecasts that total exports are anticipated to grow 5.1%
in 2014, while imports will experience growth of 3.3% in 2014. Moreover,
overall unemployment is predicted to average 6.4% in 2014 and drop to 5.8% in
2015.
The
following five stocks have registered strong growth in sales and EPS during the
trailing 12 months. These stocks are also currently trading at relatively low
forward Price-to-Earning (P/E) and Price to Book (P/B) multiples in comparison
to industry average and provide a Return on Equity (ROE) of more than 13%. All
estimates have been sourced from Bloomberg.
Alliant Techsystems
Inc.
(NYSE: ATK): The developer
and supplier of advanced weapon and space systems including military ammunition
has seen its share price nearly double during the past year. The company
recently raised its fiscal 2014 sales and EPS guidance and increased its
quarterly cash dividend by 23% to 32 cents a share. ATK’s Return on Equity is
currently 20%. Its sales are estimated to grow by 9% in 2014 with a 17.9%
expected increase in EPS.
Shiloh Industries,
Inc.
(NASDAQ: SHLO): The company
provides lightweighting and noise, vibration and harshness (NVH) solutions to
automotive, commercial vehicle and other industrial markets. Shiloh reported a
26% improvement in its first quarter 2014 sales revenue along with a 93% surge
in EPS. The company’s Return on Equity is currently 18.1%. Its sales are
estimated to grow by 13.5% in 2014 with a 27% expected increase in EPS.
AZZ Incorporated (NYSE: AZZ): The company manufactures
specialty electrical equipment and components for the global power generation,
power transmission, and distribution markets and also provides hot dip
galvanizing services to the steel fabrication industry across the United States.
Its third-quarter revenue rose 32.1% while its EPS increased by 20%. AZZ’s
Return on Equity is currently 17.8%. Its sales are estimated to grow by 33.8%in 2014 with a 4.4% expected increase in
EPS.
TriMas Corporation (NASDAQ: TRS): TriMas
manufactures trailer products, recreational accessories, packaging systems,
energy products and industrial specialty products for the commercial,
manufacturing, and consumer markets. The company recorded a 9.6% increase in sales during 2013 along
with a 12% rise in EPS. TriMas’
Return on Equity is currently 17.7%. Its sales are estimated to grow by 5.8% in
2014 with a 7.2% expected increase in EPS.
Sonoco (NYSE: SON): The company
manufactures industrial and consumer packaging solutions that include flexible
packaging, high density film products, and folding cartons. In 2013, Sonoco achieved
a 1.3% increase in its net sales as well as a nearly 5% rise in base
earnings. SON’s Return on Equity is currently 13.7%. Its sales are estimated to
grow by 2.7% in 2014 with an 8.5% expected increase in EPS.
These
five companies stand out from the pack in that they have the highest on Return
on Equity (ROE) of their group, which gives a snapshot of much profit a company
is generating for each dollar that shareholders have invested in the business.
Warren Buffett, for example, places a great importance on Return on Equity
since it allows a company to grow its business without having to borrow
excessively or without the owners of the business having to invest more
capital.
For
blog and article submissions contact:
Sean
Mason
Writer & Editor, Smallcappower.com
Email: sean@smallcappower.com
