A Pair of Promising Industrials

Manufacturing stocks have been laggards over the past six months. The industrial sector has underperformed the S&P 500 by approximately 5% since the end of the first quarter. Concerns about Europe, slowing growth in China and an anemic recovery domestically have undercut the sector's fundamentals and eroded investor sentiment.

There are some green shoots, however, that could bode well for better industrial demand. Housing finally looks like it has really bottomed in the U.S. The drought in the Midwest was the worst in 50 years, but farm income should still be a record in 2012. And numbers out of China show recent strength. September export numbers came in much stronger than expected and iron ore prices are up some 30% since their lows of six weeks ago. The Middle Kingdom also recently enacted a $150 billion stimulus program focused on building infrastructure. I would look for other efforts to boost economic performance once their leadership transition is completed....393 more words left in this article. To read them, just click below and try Real Money FREE for 14 days.

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