"A business that makes nothing but money is a poor business."
-- Henry Ford
The TV has probably informed you on many occasions that all "manufacturing is dead in America" -- and that soon, we won't even have any factories left here in the United States. With the Big Three automakers' plea for a huge government bailout still dominating the news, these claims will likely only get louder in the short run. But surprisingly enough, according to a 2006 report by the National Association of Manufacturers, U.S. manufacturing all on its own would still represent the world's eighth-largest economy!
Producing tangible goods instead of trading financial papers has somehow become both lower-paid and less desirable for American workers. Very few newly minted Ivy League MBAs now consider Ford or GM a dream destination; instead, they spend most of their job-hunting efforts trying to land the corner office on Wall Street.
But with the giant stimulus package coming out, and the with the U.S. dollar still relatively weak compared to its peak levels of 2000 to 2001, the tide seems to be turning away from less tangible sectors like investment banking, and toward companies that actually make and sell goods. This transition won't happen overnight, but we might all be surprised one day to find "production manager" as high on an MBA's wish list as "investment banker" is today.
Fortunately for fellow Fools, the CAPS screener can help us get ahead of the curve, identifying key players in this transition that, unlike General Electric (NYSE: GE ) and its potentially diminishing returns, should still have room to grow. We'll look for "investment grade" four- and five-star names in the industrial-goods sectors that have grown their earnings by at least 10% over the last tyhree years, carry low debt, and have increased their market caps over the last 4 weeks thus greatly outperforming the overall market.
Here's the actual screening criteria:
- Sector: Industrial goods
- Top CAPS ratings of four or five stars
- Market cap of $150 million to $50 billion
- Low debt/equity ratios of 0 to 0.5 times
- EPS Growth rate (last 3 years) > 10%
- Four-week price change of more than 1%
Below are six names of the more than 40 that made the cut.
|
Company Name
|
LT Debt-to-Equity Ratio
|
4 Week Price Change %
|
EPS Growth Rate (last 3 Yrs)
|
|
Astec Industries (Nasdaq: ASTE )
|
0
|
43.6%
|
28.38%
|
|
Esterline Technologies (NYSE: ESL )
|
0.33
|
18.4%
|
13.03%
|
|
Fluor (NYSE: FLR )
|
0.01
|
42.6%
|
45.94%
|
|
Lincoln Electric (Nasdaq: LECO )
|
0.07
|
20.8%
|
23.31%
|
|
Manitowoc (NYSE: MTW )
|
0.13
|
27.2%
|
68.81%
|
|
Parker Hannifin (NYSE: PH )
|
0.4
|
8.5%
|
16.01%
|
Source: Motley Fool CAPS. Dates for price change: Nov. 14, 2008 to Dec. 8, 2008.
Of course, this screen is only a starting point in the research process; the CAPS screener can help you narrow your choices even further. While you might not have a lot of time to spare in analyzing these players, many of our All-Stars have already done the initial work for you. Join us in Motley Fool CAPS to delve into their commentaries, and let our 120,000-strong (and growing) CAPS community help you sift through the rubble in search of the next few great investing ideas.
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