Even when an industry has performed well, there are individual companies within that industry that don't do as well. One fast-food chain might have investors seeing the value in a Happy Meal, while a rival is getting charbroiled.
We'll look at stocks that have been deep-fried by the markets but which investors deem ready to cook up profits. We'll seek out the assistance of the Motley Fool CAPS investor community to find stocks that previously underperformed, but which may be ready to rebound. Each week we'll check out a different sector of the economy.
Of the 285 stocks occupying the industrial goods sector in CAPS, these four have recently seen their one- and two-star ratings kicked up a notch or two by the 130,000-member community.
|
Company
|
CAPS Rating as of
Today (5 stars max.)
|
Recent
Price
|
52-Week
Price Change
|
Est. Long-Term
Growth Rate
|
|
A.O. Smith (NYSE: AOS )
|
***
|
$25.45
|
(28%)
|
6%
|
|
Masco (NYSE: MAS )
|
***
|
$7.49
|
(63%)
|
15%
|
|
United Capital (NYSE: AFP )
|
***
|
$18.42
|
(18%)
|
NA
|
|
Weyerhaeuser (NYSE: WY )
|
***
|
$28.41
|
(56%)
|
6%
|
Source: Motley Fool CAPS; Yahoo! Finance, and Capital IQ.
Industrial goods is a broad classification covering everything from heavy-equipment manufacturers such as Caterpillar (NYSE: CAT ) to stun-gun maker TASER International (Nasdaq: TASR ) . While the sector generally has fallen on hard times, you can still find companies that have been able to grow their share price, such as industrial construction firm MasTec (NYSE: MTZ ) , whose stock trades almost 45% higher than 12 months ago. That's especially remarkable when you consider that the average company in the sector lost some 46% of its value over the past year.
Let's take a closer look at what investors are saying about forester, homebuilder, and wood products manufacturer Weyerhaeuser.
Some spring in its step
Perhaps it's the surprise jump in both housing starts and new-home sales in February that has some investors thinking that Weyerhauser is ready to build on the past.
According to the U.S. Census Bureau, housing starts in February jumped 22% over January's numbers, even though they came in 47% below last year's February numbers. Similarly, the National Association of Realtors shocked everyone by reporting that existing home sales grew better than 5% last month, although the average price for a sold home was $165,400 -- down 15.5% from a year ago.
As a homebuilder and purveyor of timber, Weyerhaeuser remains highly dependent on the housing industry. Inventories at the retail level have been described as being "bare-boned" by some analysts, a level which has helped some wood prices start climbing. Still, pulp prices remain well under even those seen at the start of the year.
Weyerhaeuser is one of the top U.S. timberlands owners and wood products makers, but that doesn't mean investors are on board for its continued run-up in price. CAPS All-Star BigHorseShoe is hard-pressed to believe a payoff is in the offing:
I do not understand a 30% run up in one week for a company closing plants and shedding jobs because it doesn't see growth for another year. These are long term moves that will benefit [Weyerhaeuser] when there is a recovery, but I do not think the recovery is here right now. I am looking for a pull back to around $20.
Meanwhile, CAPS member cucselections in December praised the value of cost-cutting measures at Weyerhaueser:
Slow revenues but this company will likely cut costs. Next year, likely will split into operating co and reit. Meanwhile the future revenues (trees) continue to grow a foot a year.
The ball's in your court
There are many factors that go into whether a stock is a buy or sell. 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.
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