News

The U.S. manufacturing sector is making a slow but steady recovery as price pressures have eased substantially over the past few months. The manufacturing sector closed 2024 on a positive note, a sign that the much-needed revival is finally gathering pace.

Both manufacturing and industrial output data surpassed expectations in December, while the November figures were upwardly revised. Also, expectations are high from the newly elected President Donald Trump, who has vowed to revive the U.S. economy.

Given the positive sentiment and performance of the sector, investing in manufacturing stocks like Alcoa Corporation AA, EnerSys ENS, Chart Industries, Inc. GTLS and Packaging Corporation of America PKG that have growth potential for 2025 appears to be a prudent choice. These stocks have a Zacks Rank #1 (Strong Buy) or 2 (Buy) and assure good returns. You can see the complete list of today’s Zacks #1 Rank stocks here.

Industrial Production Jumps in December

The Federal Reserve said last week that industrial production rose 0.9% sequentially in December, sharply higher than the consensus estimate of an increase of 0.3%. November’s figures were also upwardly revised to an increase of 0.2% from a 0.1% decline. The solid month-over-month jump hints at the sector’s robust growth and economic boost.

The end of The Boeing Company’s (BA) strike also helped the manufacturing sector, with a 6.3% jump in aerospace output. Apparel and leather output also rose 1.2%.

Manufacturing output increased 0.6% in December after gaining 0.4% in the prior month. Output for mining and utilities rose 1.8% and 2.1%, respectively, last month. Output for consumer goods jumped 0.5%, while non-durable consumer goods and business equipment grew 0.7% and 1.4%, respectively.

Capacity Utilization Increases Hint at Economic Strength

Capacity utilization for manufacturing jumped 0.4% to 76.6 in December, further establishing the underlying strength of the economy. An increase in industrial output signals a strong manufacturing sector, a crucial factor for economic expansion.

The boost in production reflects the growing need for products, which implies a robust consumer market.

Industrial production slumped in September but has since been slowly rebounding. The recovery comes as the Federal Reserve cut interest rates by 100 basis points in three installments since September after inflation started showing signs of a decline. Lower borrowing costs and price pressures are spurring demand once again, which has been helping both manufacturing and output at U.S. factories.

Inflation slowed further in January, raising hopes that the Federal Reserve will continue with its rate cuts this year if the situation remains under control.

4 Stocks From the Manufacturing Sector With Upside

Alcoa Corporation

Alcoa Corporation Alcoa is a global industry leader in bauxite, alumina and aluminum products.

Alcoa Corporation’s expected earnings growth for the current year is more than 100%. The Zacks Consensus Estimate for current-year earnings has improved 5.6% over the past 60 days. AA currently sports a Zacks Rank #1.

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EnerSys

EnerSys engages in manufacturing, marketing and distribution of various industrial batteries. Additionally, ENS develops battery chargers and accessories, power equipment and outdoor cabinet enclosures. This apart, EnerSys provides support services for clients.

EnerSys’ expected earnings growth for the current year is 14.6%. The Zacks Consensus Estimate for current-year earnings has improved 8% over the past 60 days. ENS presently carries a Zacks Rank #2.

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Chart Industries

Chart Industries, Inc. is a leading independent global manufacturer of highly engineered equipment servicing end-market applications in Energy, Industry, Life Sciences and Respiratory Healthcare, with a unique business portfolio. GTLS’ equipment is used in the production, storage, distribution and end-use of atmospheric, hydrocarbon and industrial gases.

Chart Industries’ expected earnings growth for the current year is 48.1%. The Zacks Consensus Estimate for current-year earnings has improved 1.2% over the past 60 days. GTLS presently has a Zacks Rank #2.

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Packaging Corporation of America

Packaging Corporation of America is the third largest producer of containerboard products and a leading producer of uncoated freesheet paper in North America. PKG operates eight mills and 86 corrugated products manufacturing plants.

Packaging Corporation of America’s expected earnings growth for the current year is 4.4%. The Zacks Consensus Estimate for current-year earnings has improved 0.1% over the past 60 days. PKG presently carries a Zacks Rank #2.

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