U.S. macro industrial indicators are turning more positive, from industrial production to PMI to construction data, which should support improved demand levels across many companies in the months ahead. Meanwhile, Europe and China data continue to lag.
Domestic auto demand remains robust, supporting our bullish thesis on the auto manufacturers. February seasonally adjusted annual rate of auto sales rose 6.2% year over year, and was the best February since 2008.
Sector valuations look reasonable to us with average industrial stock price to fair values of 0.91. We find the auto manufacturer and aerospace & defense stocks to offer the greatest value, while the 3-D printing stocks appear expensive even after their significant recent selloff.
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