The Zacks Analyst Blog Highlights: Agilysys, Masonite, SPX And Simply Good Foods

For Immediate Release

Chicago, IL – February 5, 2020 – 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 Agilysys Inc. (NASDAQ:AGYS) , Masonite International Corp. (NYSE:DOOR) , SPX FLOW Inc. (NYSE:FLOW) and The Simply Good Foods Co. (NASDAQ:SMPL) .

Here are highlights from Tuesday’s Analyst Blog:

U.S. Manufacturing Showing Signs of Bottoming Out: Top Picks

U.S. manufacturing industry, which faced severe challenges in 2019 owing to the lingering trade conflict and tariff war with China, is showing signs of recovery. Moreover, 2020 should bring good tidings as the two countries signed a phase-one trade deal on Jan 15 to resolve the tariff war.

U.S. Manufacturing Showing Signs of Improvement

On Feb 3, the Institute of Supply Management (ISM) reported that the U.S. manufacturing activities index for the month of January came in at 50.9, its highest since July 2019. Notably, the metric showed that manufacturing activities expanded in January after five consecutive months of contraction. Any reading above 50 means expansion of U.S. manufacturing activities.

January’s data also surpassed the consensus estimate of 48.6. Moreover, December’s reading was revised upward to 47.8 from 47.2 reported earlier. The manufacturing industry accounts for around 12% of the U.S. GDP.

Most importantly, the new orders sub index of the ISM manufacturing index surged to 52 in January from a revised 47.6 in the previous month. This sub index is very important since it provides some clue to future expectations of manufacturing output.

U.S., China Sign Phase-One Trade Deal

On Jan 15, the United States and China signed a temporary trade deal popularly known as the phase-one trade deal. China has committed to buy $40 billion to $50 billion U.S. agricultural products annually and a total of $200 billion of U.S. goods over two years. The Trump administration may rollback some tariffs already imposed on China.

The deal has the provision to address intellectual-property disputes and force technology transfer along with strong enforcement provisions in financial services and currency issues in addition to tariff rollback and higher agricultural purchase. The U.S. government has decided to delete China from its list of currency manipulators.

U.S. Manufacturing to Benefit

The recently signed phase-one trade deal between the United States and China has significantly cooled down the nearly two-year-old tariff war. The interim deal will at least help in restoring U.S. business confidence and global economic growth.

China is the largest trading partner of the United States. A strong economy in China, the largest market for high-tech products, will give U.S. manufacturers a solid boost. Moreover, China plays the role of a low-cost supplier of intermediary products and other inputs to high-tech U.S. industries.

An end to the U.S.-China trade spat is likely to restore Chinese and global economic growth, which in turn will create demand for high-tech U.S. manufacturing products. Likewise, the repeal of tariffs on Chinese intermediary goods should raise the profit margin of U.S. tech giants. Moreover, clinching an agreement with China, which will strictly protect U.S. intellectual properties, will be immensely beneficial for home-grown manufacturers.

Our Top Picks

At this stage, we have narrowed down our search to four manufacturing stocks that popped in the past year and still have momentum for the current year. Each of our picks carries a Zacks Rank #1 (Strong Buy). You can see Zacks Investment Research

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Written By: Zacks Investment Research