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Invest in Manufacturing Stocks
The most recent report of the Institute for Supply Management (ISM) indicates that United States manufacturing is on the rise again after a three month lull. In the last three years the ISM index has had only three months indicating contraction of the sector and the most recent numbers are the best since 2009. So, is it time to invest in manufacturing stocks? For that matter is a good ISM manufacturing index a good reason to invest in manufacturing stocks or should one do fundamental analysis on individual stocks in the manufacturing sector in order to decide? First of all let’s look at the most recent figures.
The ISM Manufacturing Index
The ISM index is a monthly product of the Institute for Supply Management. The institute was founded in 1915 and is the world’s first such organization. The focus of the ISM is supply management, the “identification, acquisition, access, positioning, and management of resources and related capabilities the organization needs or potentially needs in the attainment of its strategic objectives.” (ISM) The ISM manufacturing index is used by many as an economic indicator as the ordering of materials typically precedes the sale of manufactured products and profits. Want to make money by investing? Follow the ISM to good insights into which economic sectors are on the rise or ready to fall.
The ISM follows these aspects of supply management:
• Purchasing/procurement
• Strategic sourcing
• Logistics
• Quality
• Inventory control
• Materials management
• Warehousing
• Transportation/traffic/shipping
• Disposition/investment recovery
• Distribution
• Receiving
• Packaging
• Product/service development
• Manufacturing supervision
The Unexpected Recovery of United States Manufacturing
The reasons we are thinking that one may want to invest in manufacturing stocks are two. The ISM report indicates that US manufacturing is getting back on track after a brief lull. And, the economic boost from Federal Reserve bond purchases will drive down interest rates. Low interest rates commonly go with economic expansion as companies take advantage of low rates to make repairs, expand, increase R&D, and hire more workers. The ISM manufacturing index went up to 51.5 in the last reported month (September). Any number above 42.5 is considered an indication of expansion. Analysts had expected an improvement but not anything this good.
Who Are We Talking About?
When we suggest that you might want to invest in manufacturing stocks who do we mean? Boeing, General Electric, General Motors, United Technologies Corp, Honeywell International, and Caterpillar are just a handful of United States manufacturers. Each company has its niche and its story. General Motors, GM, has just emerged from bankruptcy. Invest in Boeing? Boeing, BA, is rolling out the new s
2. THE MOST RECENT REPORT OF THE INSTITUTE
FOR SUPPLY MANAGEMENT (ISM) INDICATES
THAT UNITED STATES MANUFACTURING IS ON
THE RISE AGAIN AFTER A THREE MONTH LULL.
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3. IN THE LAST THREE YEARS THE ISM INDEX HAS
HAD ONLY THREE MONTHS INDICATING
CONTRACTION OF THE SECTOR AND THE MOST
RECENT NUMBERS ARE THE BEST SINCE 2009.
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4. SO, IS IT TIME TO INVEST IN MANUFACTURING
STOCKS?
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5. FOR THAT MATTER IS A GOOD ISM
MANUFACTURING INDEX A GOOD REASON TO
INVEST IN MANUFACTURING STOCKS OR
SHOULD ONE DO FUNDAMENTAL ANALYSIS ON
INDIVIDUAL STOCKS IN THE MANUFACTURING
SECTOR IN ORDER TO DECIDE?
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6. FIRST OF ALL LET’S LOOK AT THE MOST
RECENT FIGURES.
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8. THE ISM INDEX IS A MONTHLY PRODUCT OF
THE INSTITUTE FOR SUPPLY MANAGEMENT.
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9. THE INSTITUTE WAS FOUNDED IN 1915 AND IS
THE WORLD’S FIRST SUCH ORGANIZATION.
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10. THE FOCUS OF THE ISM IS SUPPLY
MANAGEMENT, THE
“IDENTIFICATION, ACQUISITION, ACCESS, POSITI
ONING, AND MANAGEMENT OF RESOURCES AND
RELATED CAPABILITIES THE ORGANIZATION
NEEDS OR POTENTIALLY NEEDS IN THE
ATTAINMENT OF ITS STRATEGIC OBJECTIVES.”
(ISM)
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11. THE ISM MANUFACTURING INDEX IS USED BY
MANY AS AN ECONOMIC INDICATOR AS THE
ORDERING OF MATERIALS TYPICALLY PRECEDES
THE SALE OF MANUFACTURED PRODUCTS AND
PROFITS.
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12. WANT TO MAKE MONEY BY INVESTING?
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13. FOLLOW THE ISM TO GOOD INSIGHTS INTO
WHICH ECONOMIC SECTORS ARE ON THE RISE
OR READY TO FALL.
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14. THE ISM FOLLOWS THESE ASPECTS OF SUPPLY
MANAGEMENT:
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17. THE REASONS WE ARE THINKING THAT ONE
MAY WANT TO INVEST IN MANUFACTURING
STOCKS ARE TWO.
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18. THE ISM REPORT INDICATES THAT US
MANUFACTURING IS GETTING BACK ON TRACK
AFTER A BRIEF LULL.
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19. AND, THE ECONOMIC BOOST FROM FEDERAL
RESERVE BOND PURCHASES WILL DRIVE DOWN
INTEREST RATES.
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20. LOW INTEREST RATES COMMONLY GO WITH
ECONOMIC EXPANSION AS COMPANIES TAKE
ADVANTAGE OF LOW RATES TO MAKE
REPAIRS, EXPAND, INCREASE R&D, AND HIRE
MORE WORKERS.
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21. THE ISM MANUFACTURING INDEX WENT UP TO
51.5 IN THE LAST REPORTED MONTH
(SEPTEMBER).
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22. ANY NUMBER ABOVE 42.5 IS CONSIDERED AN
INDICATION OF EXPANSION.
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23. ANALYSTS HAD EXPECTED AN IMPROVEMENT
BUT NOT ANYTHING THIS GOOD.
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24. WHO ARE WE TALKING ABOUT?
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25. WHEN WE SUGGEST THAT YOU MIGHT WANT TO
INVEST IN MANUFACTURING STOCKS WHO DO
WE MEAN?
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26. BOEING, GENERAL ELECTRIC, GENERAL
MOTORS, UNITED TECHNOLOGIES
CORP, HONEYWELL INTERNATIONAL, AND
CATERPILLAR ARE JUST A HANDFUL OF UNITED
STATES MANUFACTURERS.
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27. EACH COMPANY HAS ITS NICHE AND ITS STORY.
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28. GENERAL MOTORS, GM, HAS JUST EMERGED
FROM BANKRUPTCY.
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30. BOEING, BA, IS ROLLING OUT THE NEW STATE
OF THE ART 787 DREAMLINER AT $200 A
CRACK.
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31. CATERPILLAR, CAT, SUPPORTS CONSTRUCTION
PROJECTS IN THE USA AND ACROSS THE
WORLD.
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32. UNITED TECHNOLOGIES CORP, UTX, PROVIDES
HIGH TECH PRODUCTS FOR BUILDING SYSTEMS
AND AEROSPACE.
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33. HONEYWELL, HON, PROVIDES DIVERSIFIED
PRODUCTS AND SOLUTIONS TO CUSTOMERS
WORLDWIDE.
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34. AND, GENERAL ELECTRIC, GE, PRODUCTS
AND SERVICES INCLUDE AIRCRAFT
ENGINES, POWER GENERATION, WATER
PROCESSING, HOUSEHOLD APPLIANCES AND
MEDICAL IMAGING.
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35. IF YOU WANT TO INVEST IN MANUFACTURING
STOCKS AS THE SECTOR RECOVERS THE ABOVE
STOCKS MAY WELL BE GOOD PLACES TO START.
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37. IF YOU ARE GOING TO INVEST IN
MANUFACTURING STOCKS BASED ON THE MOST
RECENT ISM REPORT, REMEMBER THAT THE
JUST-RELEASED ISM INDEX HAS TO DO WITH
US MANUFACTURING AND NOT
MANUFACTURING IN JAPAN, CHINA, TAIWAN,
OR GERMANY.
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38. FOR US MANUFACTURING INDICES OF EXPORT
GROWTH AND PLACEMENT OF NEW ORDERS
WERE BOTH HEARTENING.
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39. EMPLOYMENT IN THE MANUFACTURING SECTOR
ALSO ROSE.
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40. INDICES IN THEUK AS WELL AS CHINA BOTH
FELL IN SEPTEMBER.
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41. FOR MORE INSIGHTS AND USEFUL INFORMATION
REGARDING INVESTMENTS AND INVESTING, VISIT
WWW.PROFITABLEINVESTINGTIPS.COM.