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Quarter-End Insights

Our Outlook for Industrials Stocks

Prospects look positive for autos, railroads, and staffing, while possible sequestration could bode ill for defense.

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  • Macro industrial indicators are mixed but slightly positive in our view: Domestic industrial production rose 2.5% in November, but PMI remains below the critical 50 mark in both the U.S. and eurozone, though the latter increased to a nine-month high.
  • Domestic auto demand remains robust: November was the best month this year for U.S. light-vehicle seasonally adjusted sales;  General Motors (GM) and  Ford (F) are still 5-star buys.
  • The fourth quarter brought a flurry of dividend activity ahead of potential U.S. income tax rate changes.

 

Keith Schoonmaker has a position in the following securities mentioned above: GM. Find out about Morningstar’s editorial policies.