Zen and the Art of Investing in Industrial Stocks (XLI) (CMI) (DOV) (CA) (IR) (LII) (WSO) (ETN) (EMR)
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Cummins (NYSE: CMI) was sunk, Dover (NYSE: DOV) has been shunned, and investors are either ringing their hands or counting their lucky stars that they don't own Caterpillar (NYSE: CAT). Unless you consider a fresh batch of gray hairs as a positive development, investing in industrial stocks hasn’t worked this week.
An analyst at MKM Partners is taking an overtly old fashioned and rather boring approach to profiting from industrial stocks – patience.
Sentiment in industrial stocks is clearly bearish, and the market could be reaching "capitulation," according to Industrials Analyst, Josh Pokrzywinski, at MKM. "We continue to believe the group is range bound as the industrial cycle appears to be 'over' with multiple compression limiting earnings growth upside for global macro exposed names," said Pkrzywinski in an a report today.
"That said, we believe we are rapidly approaching the bottom of the range and believe a 10-15% bounce in the group on an earnings reset could take place."
Ahead of earning, he favors "safety" names, including Ingersoll Rand
(NYSE: IR), Lennox (NYSE: LII), and Watsco (NYSE: WSO). Pkrzywinski also thinks Eaton (NYSE: ETN) and Emerson (NYSE: EMR) are becoming increasingly attractive, although buying ahead of earnings might not be the best move. Remember the idea here is to profit from the best commodity of them all, patience.
Industrial Select Sector SPDR (NYSE: XLI) is higher by 1.6 percent today, paring losses for the week.
An analyst at MKM Partners is taking an overtly old fashioned and rather boring approach to profiting from industrial stocks – patience.
Sentiment in industrial stocks is clearly bearish, and the market could be reaching "capitulation," according to Industrials Analyst, Josh Pokrzywinski, at MKM. "We continue to believe the group is range bound as the industrial cycle appears to be 'over' with multiple compression limiting earnings growth upside for global macro exposed names," said Pkrzywinski in an a report today.
"That said, we believe we are rapidly approaching the bottom of the range and believe a 10-15% bounce in the group on an earnings reset could take place."
Ahead of earning, he favors "safety" names, including Ingersoll Rand
(NYSE: IR), Lennox (NYSE: LII), and Watsco (NYSE: WSO). Pkrzywinski also thinks Eaton (NYSE: ETN) and Emerson (NYSE: EMR) are becoming increasingly attractive, although buying ahead of earnings might not be the best move. Remember the idea here is to profit from the best commodity of them all, patience.
Industrial Select Sector SPDR (NYSE: XLI) is higher by 1.6 percent today, paring losses for the week.
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