For Immediate Release
Chicago, IL – April 26, 2010 – Zacks.com announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include: Boeing (BA), Textron (TXT), Hewlett-Packard (HPQ), Intel (INTC) and Western Digital (WDC).
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Here are highlights from Friday’s Analyst Blog:
Aircraft Nosedive Durable Goods
Orders for non-defense aircraft are quite volatile. As Johnny Carson might have asked, “How volatile ARE they?” In March they were down 67.1%, which sort of makes it sound like Boeing (BA) is going out of business, until you consider that in February non-defense aircraft orders rose by 32.7% and in January they shot up by 134.9%. These are month to month changes that can give any analyst airsickness.
Year-to-date, non-defense aircraft orders are running 71.6% above the levels of a year ago, so no, Boeing, and makers of smaller aircraft like Textron (TXT) are not hurting overly much — it is just that the orders tend to be very lumpy from month to month. Aircraft are also very expensive, so a few more or fewer 787’s ordered this month can have a very big impact on overall orders.
Aerospace firms also tend to get a fair amount of work from the Pentagon, and orders from Defense aircraft rose 2.0% after a 20.6% plunge in February, which reversed a 17.3% rise in January. Year-to-date, orders are up 21.4%.
In other words, if you want to filter out the noise, focus on the numbers excluding Transportation orders, or at least look at a longer time-frame than just a month in looking at Transportation orders.
Orders for Machinery were up 8.6% in March on top of a 6.9% increase in February but a 9.9% decline in January and are up 11.7% on a year-to-date basis. This is extremely encouraging, especially considering that the nation’s factories are only running at 70% of capacity. A more normal level of factory utilization is 80%, and while manufacturing capacity utilization is up from 65.2%, it is still at a level only seen at the very worst points in previous recessions.
To be investing heavily in new machines when apparently so many are sitting idle indicates a lot more confidence on the part of companies about capital spending. A similar pattern can be seen in orders for computers, which saw a 12.9% rise in March on top of a 4.6% increase in February, but those were making up for a tough January when orders dropped 10.6%. On a year-to-date basis, orders are up 10.5%.
Clearly the surge is good news for both the computer firms like Hewlett-Packard (HPQ) but also for the makers of chips that go into them like Intel (INTC) and component manufacturers like Western Digital (WDC).
While the headline on this report might have been ugly, the contents of it were looking pretty good. I would rate this report as a solid positive for the economy and more evidence that the recovery is starting to pick up some steam.
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