On a relative scale, the industrial sector has not been performing well on a year-to-date basis. This is in contrast to what the market had expected especially after an improving housing market and growth in developing economies. However, the good news is that the industrial goods sector has been on a tear since the last week after China reported solid growth figures.
The following graph shows that:
The question arises: If this momentum carries on, what are the best picks in the industrial sector? Well, I have shortlisted three of them:
3 Super Industrial Stocks
Moreover, the Street continues to see good runway for solid crane demand going forward, with energy and infrastructure related end markets in North and South America in particular continuing to drive demand. The market has seen a subtle increase in the large infrastructural projects such as the three bridge construction projects that are beginning in the New York City area this year.
Also, solid and improving prospects for large energy and petrochemicals projects are expected to move forward over the next several years, which could continue to support crane demand. This opportunity has been created after an improvement in the wind market (as a result of the extension of production tax credits).
Beyond the energy end-markets, there are prospects for improvements in “traditional” non-residential construction in North America over time, with Manitowoc Company, Inc. (NYSE:MTW) being the best positioned amongst the machinery companies to benefit from potential recovery in non-residential construction.
Manitowoc Company, Inc. (NYSE:MTW) is increasingly focused on driving margin improvements in its crane business. While Crane margins improved by 120 bps in 2012 from a cyclical low of 5.1% to 6.3%, operational improvements such as further LEAN implementations and a more focused approach to lowering costs in its European manufacturing operations will help Manitowoc Company, Inc. (NYSE:MTW) to continue to generate solid Crane margin improvements in 2013 and beyond. A continued focus on driving positive price realization could also help drive margin recovery and, while mix has been a headwind thus far in the current cycle (with lower margin all-terrain and rough-terrain cranes leading the recovery), over time, higher margin crawler cranes could become a growing portion of the revenue mix, providing additional margin tailwinds.
In the near-term, Manitowoc Company, Inc. (NYSE:MTW)’s Foodservice business is also well positioned for continued solid execution, and could continue to see margin expansion over time as the company implements a revamped manufacturing footprint.
