Jefferies Gives Outlook For Diversified Industrials

In a report released by Jefferies today, analysts claim, “they prefer more domestic centric names with diversified exposure to the manufacturing sector. In terms of end markets, we favor general industrial, auto, aerospace and rail to construction and oil/gas.” Mid-cap industrials, measured by the S&P400 Index, have underperformed the broader market by 5.3%YTD and 3.6% for the month. This is being driven by weak economic news and stronger relative performance from financial and healthcare companies. Analysts at Jefferies believe that despite the poor performance of industrial companies in a slower growth environment, there may still be company specific initiatives that will result in above average growth earnings and high performance from stocks over the next 12-18 months. Jefferies presented its top pick to be MSC Industrial (MSM), where sales are growing at close to 30% and the company continues to gain market share. Analysts also find Greenbrier (GBX) an attractive investment as the company is poised to benefit from a railcar industry recovery. GBX seems undervalued and well positioned with a diversified model.