Seeking Alpha
Value, growth, long-term horizon, medium-term horizon
Profile| Send Message| ()  

For those investors who believe that the U.S. economy has survived through the worst macro threats, the industrials sector might be of interest. The sector is very closely related to the health of the economy. When the supply and demand for manufactured products grows, the potential for upside in the sector can be tremendous.

With this in mind, we created the list below by screening for stocks in the industrials sector currently favored by money managers.

We began by screening the industrial sector for stocks that are rallying above their 20-day, 50-day, and 200-day moving averages, indicating that these stocks have strong upward momentum.

We then screened for those with bullish sentiment from institutional investors, with significant net institutional purchases over the last quarter representing at least 5% of share float. This indicates that institutional investors such as hedge fund managers and mutual fund managers expect these names to outperform into the future.

For an interactive version of this chart, click on the image below. Analyst ratings sourced from Zacks Investment Research.

Do you think these stocks are poised to outperform? Use this list as a starting point for your own analysis.

1. AM Castle & Co. (CAS): Provides value-added processing services to a variety of industrial companies.

  • Market cap at $395.27M, most recent closing price at $17.13.
  • Net institutional purchases in the current quarter at 1.3M shares, which represents about 13.47% of the company's float of 9.65M shares. The 2 top holders of the stock are Huber Capital Management, and Dimensional Fund Advisors.
  • The stock is currently trading 0.52% above its 20-day moving average, 0.68% above its 50-day moving average, and 29% above its 200-day moving average.
  • The company's earnings growth looks weak, with EPS growing by -453.62% over the last year. This is considerably weaker than competitors Reliance Steel & Aluminum Co. (EPS growth over the last year at 16.34%).
  • CAS has recorded a solid performance over the last month, returning 0.59% since 3/8/13. This performance has eclipsed the likes Allegheny Technologies Inc. (ATI), but have lagged Reliance Steel & Aluminum Co. (RS), which returned 0.67% during the same holding period.

2. Chicago Bridge & Iron Company N.V. (CBI): Provides engineering, procurement, and construction (EPC) solutions, as well as process technologies for the energy infrastructure projects.

  • Market cap at $6.19B, most recent closing price at $57.97.
  • Net institutional purchases in the current quarter at 5.9M shares, which represents about 5.68% of the company's float of 103.84M shares. The 2 top holders of the stock are Steadfast Capital Management, and Balyasny Asset Management.
  • The stock is currently trading 0.24% above its 20-day moving average, 6.11% above its 50-day moving average, and 34% above its 200-day moving average.
  • In recent news, Goldman Sachs initiated coverage on CBI and set a "buy" rating and a $68 price target on shares. Zack's maintained its "neutral" rating and a $60 target price. Barclays gave an "overweight" rating and raised target price from $63.00 to $71.00.
  • According to a Goldman Sachs analyst "We are positive on CBI's best in class LNG franchise (33% of profits) and attractive competitive and technology positioning in the chemicals market (7%) driving our 15% above consensus estimates and strong orders growth over 2013-15E, more than offsetting a tough US Power (23%) outlook."

3. Primoris Services Corporation (PRIM): Provides a range of construction, fabrication, maintenance, replacement, water and wastewater, and product engineering services.

  • Market cap at $1.14B, most recent closing price at $22.19.
  • Net institutional purchases in the current quarter at 3.3M shares, which represents about 11.02% of the company's float of 29.95M shares. The 2 top holders of the stock are Wells Fargo & Co., and The Vanguard Group.
  • The stock is currently trading 2% above its 20-day moving average, 10% above its 50-day moving average, and 45% above its 200-day moving average.
  • PRIM's subsidiaries - ARB and James Construction Group - recently won two major contracts worth over $393 million for a pipeline integrity work in California and a large highway infrastructure project in Mississippi.

4. TMS International Corp. (TMS): Provides outsourced industrial services to steel mills worldwide.

  • Market cap at $543.42M, most recent closing price at $13.91.
  • Net institutional purchases in the current quarter at 907.4K shares, which represents about 6.26% of the company's float of 14.50M shares. The 2 top holders of the stock are Robeco Investment Management, and Oaktree Capital Management.
  • The stock is currently trading 3% above its 20-day moving average, 2% above its 50-day moving average, and 22% above its 200-day moving average.
  • On March 21 TMS announced they had "successfully completed a repricing of its $300 million term loan facility that is expected to reduce its cash interest costs by approximately $3 million annually." TMS plans to announce first quarter 2013 results before market open on April 25.

5. Unifi Inc. (UFI): Produces and processes polyester and nylon yarns.

  • Market cap at $375.07M, most recent closing price at $18.74.
  • Net institutional purchases in the current quarter at 2.0M shares, which represents about 14.5% of the company's float of 13.79M shares. Te 2 top holders of the stock are Dimensional Fund Advisors, and Impala Asset Management.
  • The stock is currently trading 3% above its 20-day moving average, 18% above its 50-day moving average, and 42% above its 200-day moving average.
  • On March 25 Unifi entered a stock purchase agreement with Dillon Yarn Corp for 500,000 shares of common stock for $8.5 million ($17/share).

*Institutional data sourced from Fidelity, all other data sourced from Finviz.

Source: 5 Rallying Industrial Stocks Being Bought Up By Hedge Funds