3 stocks that analysts say can take advantage of industry growth
Rising stock market activity often indicates impending change, and this phenomenon is very pronounced in the industrial and manufacturing sectors. The industrial sector, traditionally considered stable and unremarkable, experienced a sudden growth after the US presidential election.
The Industrial Select Sector SPDR Fund posted a 6.2% increase in a single week. This development is related to the potential recovery of the industrial sector, which could have a positive impact on the shares of some major companies. Which 3 stocks do analysts trust the most?
Deere & Company $DE
Deere & Co. is a well-known agricultural equipment manufacturer whose stock is now near its 52-week high. Still, some analysts predict that the stock price could rise another tens of percent in the coming months. The current average analyst estimate is $420.7 per share. For example, analysts at Truist Financial project a value of up to $496 for this stock, which could represent an increase of up to 26%.
Another positive factor, according to analysts, is the 11.2% decline in short positions on Deere stock over the past month. This trend can be seen as an exit of the "bears" and an increase in investor interest in further growth. In other growth news, the Ontario Teachers Pension Plan Board increased its stake in Deere shares by 11.6%, which analysts say reflects positive expectations that Deere can benefit from growth in demand for farm equipment.
United States Steel $X
According to analysts, United States Steel stock also has significant upside potential that could take advantage of rebounding demand in the steel industry. USS stock is currently valued at 0.8 times book value, which means it is undervalued in the market by 20% compared to its fair value. Analysts believe that if the expected growth in demand occurs, this difference could quickly close.
Another positive factor is the 7.7% decline in short positions on USS shares, which may indicate a reduction in investors' negative expectations. Analysts believe that if United States Steel can take advantage of the growing demand for steel, particularly through infrastructure projects and industrial orders, this could be a significant growth opportunity with the potential to reach new highs.
Cummins Inc. $CMI
Cummins, a leading manufacturer of diesel engines, could benefit from rising transportation demand that is key to supply chains, according to analysts. Citigroup raised its target price on Cummins stock to $375, reflecting their expectation of steady growth. This positive outlook has been reinforced by increased interest from large investors such as Swiss National Bankwhich increased its stake to USD 131.4 million.
Similar to previous companies, analysts are seeing a reduction in short positions, indicating a shift in interest from pessimistic to growth-oriented investors. Cummins could further benefit from growing activity in the industrial sector, where demand for diesel engines for transportation is key.
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