Rail Shipments Steady as European Data Shows Strength (APOG)

In its report about weekly rail shipments, Piper Jaffray says, "Weekly Rail Shipments were solidly up y/y for lumber, sand/gravel and metal products. Shipments of metal products moderated somewhat in conjunction with a step up in CY09 comps. On Thursday the preliminary Euro zone July PMI came in at a three month high and well above forecasts, while May industrial order data increased by 3.8% sequentially signaling the recovery in the region remains intact. We continue to see a steady industrial recovery with the manufacturing industry leading the way." Piper Jaffray sees this as neutral for Apogee Enterprises, Inc. APOG, and as such writes, "We see modest y/y revenue growth associated with residential construction for Beacon Roofing (Overweight) and Pool Corporation (Neutral) as conditions appear to be slightly better than last year. Recent y/y growth in Sand & Gravel shipments continue to point to significant road paving activity, with Astec (Neutral) benefiting. We continue to believe demand for APOG glass (Neutral) will remain constrained over an extended period. On the manufacturing side, strong metal shipments support a gradually strengthening domestic manufacturing environment that should help support demand for our manufacturing sector coverage names, although some recent data suggests softness near-term."