Vermilion Macro Vision: Manufacturing Sector Synopsis
Manufacturing Sector: Overweight. This Sector is increasingly becoming mixed. We believe the strength in the U.S. dollar is to blame, as U.S. companies become less competitive on a global front. The recent trading range of the U.S. dollar is creating mixed messages for investors, and uncertainty often leads to trading ranges. We would prefer taking a stock-picking approach to the Sector overall, as breadth remains constructive. A few technically attractive charts in the Diversified Manufacturing Groups are: SIEGY, ITW, JCI, PHG, CSL, LUK, CR, BRC, SPXC, LDL, and HSC. Large-Cap Aero Defense remains leadership and is currently experiencing a pullback to the long-term uptrend. Attractive names on this pullback include: BA, LMT, RTN, GD and NOC. Many of the Aerospace and Component Suppliers continue to exhibit leadership characteristics. Names that are technically attractive include: TDG, TXT, SPR, HXL, ERJ, CW, TDY, HEI.A, AIR, ATRO, DCO, SPA, ESLT, DGI, RAVN, DCO, CAE, ESL, MOG.A, KTOS, and DCO. Many of the Small-Cap Auto Suppliers are reversing multi-year downtrends and reflect leadership characteristics. Technically attractive names in this Group are: DORM, DAN, FDML, SMP, MTOR, and FOXF. Another Group exhibiting bottoming characteristics is MF-14 Trucks & Components; names that are technically attractive include CMI, ALSN, OSK, NAV, RUSHA, TWI, CYD, BLBD, STS, RUSHB, and ACW. Group MF-15, Railroad equipment & Products, is reversing a 2-year price downtrend, and a few names appear to be staging price and RS reversals. We like TRN and GATX in the Group. Group MF-16, Construction Equipment, is staging price and RS reversals. Names that are technically attractive are CAT, CAE, TEX, RUSHA, ALG, CMCO, NC, and GENC. Group MF-31, Building Products and Fixtures, appears to putting in a major top pattern. RS is breaking a multi-year uptrend; thus, we are becoming increasingly concerned with the housing market in a rising rate environment (see attached document for complete sector thoughts and recommendations).For a trial to Vermilion Technical Research call (952) 922-7500, or visit our website at: www.vermilioncap.com
AAR is a provider of products and services to the aviation and government and defense markets. The company reports its activities in two business segments: Aviation Services and Expeditionary Services. The Aviation Services segment provides aftermarket support and services for the commercial aviation and government and defense markets. In this segment, the company also provides inventory management and distribution services, maintenance, repair and overhaul, and engineering services. The Expeditionary Services segment consists of businesses that primarily provide products and services supporting the movement of equipment and personnel by the U.S. and foreign governments and non-governmental organizations.
Vermilion Research delivers timely, actionable, and unique research inputs to professional investors. Our research strategists highlight securities which we believe are at major inflection points, based on our various proprietary technical indicators, and offer asymmetric risk/return profiles. We believe our research methodology, which is not limited by industry sector or market capitalization, enables us to deliver superior investment recommendations.
Our process begins by organizing all actively traded stocks into coherent sectors, then into logical industry groups. We then apply our proprietary relative strength tools to identify developing price trends. Once attractive trends are identified within a selected sectors or groups, we screen for individual stocks which we believe offer the best risk/reward profile. Vermilion offers U.S. and global equity market research products. Vermilion’s research team, which has received numerous awards and accolades, has a combined 70 year of experience in the analysis of investment securities.
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