However hard the market slams a stock, there's always the chance it'll come bouncing right back. We'll consult our Motley Fool CAPS community to find shares on the rebound, examining one specific sector of the economy in search of companies with rising CAPS ratings.
Among the more than 293 stocks listed under industrial goods in the CAPS' screener, we've unearthed more than a few with five-star ratings. Those accolades mean our 140,000 CAPS members are confident that these stocks will beat the market in the months ahead, but let's see what members are saying about the five below:
|
Company
|
CAPS Rating Today
|
Recent Price
|
52-Wk Price Change
|
Est. 5-Year Growth Rate
|
|
Bucyrus International (Nasdaq: BUCY )
|
*****
|
$38.77
|
54%
|
10%
|
|
Flowserve (NYSE: FLS )
|
*****
|
$105.95
|
61%
|
7%
|
|
Foster Wheeler (Nasdaq: FWLT )
|
*****
|
$32.53
|
19%
|
10%
|
|
Joy Global (Nasdaq: JOYG )
|
*****
|
$52.22
|
96%
|
8%
|
|
Leucadia National (NYSE: LUK )
|
*****
|
$26.02
|
(17%)
|
N/A
|
Source: Motley Fool CAPS; Yahoo! Finance.
While some companies in the industrial goods sector have obviously fared better than others -- Smith & Wesson Holding (Nasdaq: SWHC ) jumped 142% over the last year after all, and tiny electric motor and controller maker UQM Technologies (NYSE: UQM ) more than tripled -- and according to our CAPS database, the average industrial goods stock is also motoring along with returns of more than 27% from the year-ago period. So let's take a closer look at why investors think that some of these companies won't be jumping from the frying pan into the fire from the market's lofty heights.
Some spring in its step
Rising commodity prices ought to cause increasing demand for new mining equipment to extract metals from the earth. If you just look at the domestic market, however, it's still a pretty gloomy picture. Joy Global reported last month that utilization rates for industrial production here at home dropped to 65% compared to last year as companies reduced inventories. And thermal coal demand is expected to be off 10% to 12% this year, so based on second quarter output, production will need to drop by another 10 to 30 million tons to balance demand.
Yet when you look at the global perspective things seem a lot brighter. The economies of China, India, Germany, France, and Japan all recorded positive growth in the second quarter, while commodity prices for copper and steel have risen significantly from their lows. Commodity imports in China are also soaring with metallurgical and thermal coal, copper, and iron ore all at record levels. CAPS member msbob7 says the country is consuming coal like there's no tomorrow.
Even here at home, one can make a case for the clouds parting. Although the decline in the U.S. has been much steeper than abroad, expectations are that the coal market can rebound a year or so after international markets. So, if international markets are actually correcting now, it may be 2010 or early 2011 before the demand for coal recovers.
Joy Global remains an investor favorite, even with its higher forward-looking valuation. Of the more than 1,400 CAPS members that have rated it, fully 98% have indicated they believe it will continue to outperform the market. The Construction Machinery sector it belongs to on CAPS is also well liked, with about one half of all the companies there enjoying five-star ratings.
The ball's in your court
There are many factors that go into whether a stock is a buy or sell, so it pays to start your own research on these stocks on Motley Fool CAPS. Read a company's financial reports, scrutinize key data and charts, and examine the comments your fellow investors have made all from a stock's CAPS page. Head over to CAPS today and share your thoughts with other investor analysts on whether you think these stocks are ready to bound higher.
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