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In the past five weeks, an industry group that normally attracts little attention has rocketed higher. IBD’s Machinery-General Industrial subgroup might sound like a collection of companies that have been around forever, but that doesn’t mean the group can’t be a winner. Charts tell the story. The Nasdaq and S&P 500 both hit a low Jan. 20 and then rebounded — only to soon go down and strike a fresh low. Machinery-General Industrial handled the situation better. The group hit a closing low Jan. 21 and then marched steadily higher. There was no second low. While the Nasdaq and S&P 500 are up about 4% and 6% since their first low, Machinery-General Industrial is up 16%. If you’ve been following the news, you know that the press has been reciting over and over that manufacturing is in terrible shape. Perhaps the problems are overblown. The action of the machinery stocks tells a less pessimistic story. And the latest industrial production report seemed to back the optimists: January output rose 0.9%, more than double expectations. The February numbers aren’t expected until later this month. Meanwhile, February’s ISM Manufacturing Index released Tuesday showed the best number in five months, though at 49.5 reflecting a slight contraction. Which stocks in the Machinery-General Industrial group led over the past five weeks? Nordson ( NDSN ), which manufactures products used to dispense adhesives, coatings and sealants, jumped 35% in roughly five weeks. Colfax ( CFX ), a diversified manufacturing and engineering company, rumbled 32% higher. Hyster-Yale Materials Handling ( HY ), a maker of lift trucks, popped more than 30%. Graco ( GGG ), a manufacturer of equipment for fluid applications, advanced 25%. The charts: Nordson is near a 74.34 buy point in a double-bottom base. Colfax is 51% off its high with no entry in sight. Hyster-Yale is working on its seventh weekly gain in a row but is 20% off its 76.50 high in May. Graco is 2% above a 77.65 buy point and extended past a 73.59 double-bottom-with-handle entry. What about earnings? For some, it’s a turnaround story. Nordson’s earnings, on a year-ago basis, declined 7% in fiscal 2015 ended in October. The Street, though, expects earning to grow 9% in fiscal 2016 and 10% in fiscal 2017. Both percentages reflect upward revisions. Colfax’s earnings slid 27% in 2015. Analysts expect a 9% drop this year and an 11% increase in 2017. Both represent upward revisions. Hyster-Yale’s earnings skidded 22% in 2015. The Street’s consensus estimate is for an earnings drop of 10% this year and then a 25% jump in 2017. Both reflect downward revisions. Graco’s EPS rose 7% last year. Analysts are pegging earnings growth in 2016-17 at 6% and 9% respectively. Both are upward revisions. Scalper1 News
Scalper1 News