Twenty-Six Stock Tips from the U.S. Government

Government economic reports can do more than just indicate the state of the economy. Since many of the reports include industry-level data, digging deeper in the reports can help investors find specific industries to consider more closely. For example, the Bureau of Labor Statistics, which prepares the PPI report, provides detailed information on an industry basis. The problem is figuring out how to find it on their Web site. Starting at the PPI homepage, I scroll down to the headline that says "Get Detailed PPI Statistics," then click on "industry data."

You can then pick out which industries you want to see (I pick them all) and click "retrieve data." I then select "more formatting options," and click on the boxes for 12-month percent change, all years, and include graphs. Once I hit "retrieve data" again, I have what I'm looking for: graphs that make it easy to tell which industries are gaining or losing their pricing power.

Since I wrote about the PPI data in September, the pricing power has shifted to some different industries. Therefore, I thought an update would be in order.

As I pointed out last month, year-over-year price increases for petroleum refineries have suddenly shot straight up. In January, the gain was 48.8%, and in February it was 42.8%. I still like Frontier (FTO - commentary - Cramer's Take), but the news is also positive for:

Valero (VLO - commentary - Cramer's Take)

Sunoco (SUN - commentary - Cramer's Take)

Tesoro (TSO - commentary - Cramer's Take)

Western Refining (WNR - commentary - Cramer's Take)

Holly (HOC - commentary - Cramer's Take)

Delek (DK - commentary - Cramer's Take)

CVR Energy (CVI - commentary - Cramer's Take)

Be warned, however, that the crack spreads are acting funny these days.

Year-to-Year Price Increase for Petroleum Refiners

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Source: Bureau of Labor Statistics

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Prices for industrial gases surged 15.5% in January and 10.3% in February. Some of the leading companies in this space are Praxair (PX - commentary - Cramer's Take), Air Products (APD - commentary - Cramer's Take) and Airgas (ARG - commentary - Cramer's Take).

Year-to-Year Price Increase for Industrial Gas Manufacturing

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Source: Bureau of Labor Statistics

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Shifting gears a bit, let's look at electronic computer manufacturing. Pricing power is about as bad as it can get for these guys, with the 20.1% decline in February being comparable to prior cyclical troughs.

Depending on your point of view, this could either be a bearish signal or a contrary bullish one. Either way, the companies most affected are obviously Dell (DELL - commentary - Cramer's Take), Apple (AAPL - commentary - Cramer's Take) and Hewlett Packard (HPQ - commentary - Cramer's Take).

Year-to-Year Price Increase for Electronic Computer Manufacturing

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Source: Bureau of Labor Statistics

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Ever wonder why Robert Marcin is so bullish on hard-drive makers? They are one of the industries that had pricing power back in September and have managed to maintain it. The 2.1% year-over-year decline is the best on record.

Of course, there's a contrarian way to play that as well. Names include:

Brocade (BRCD - commentary - Cramer's Take)

EMC (EMC - commentary - Cramer's Take)

Iomega (IOM - commentary - Cramer's Take)

Hutchinson (HTCH - commentary - Cramer's Take)

Quantum (QTM - commentary - Cramer's Take)

SanDisk (SNDK - commentary - Cramer's Take)

Seagate (STX - commentary - Cramer's Take)

Western Digital (WDC - commentary - Cramer's Take)

Year-to-Year Price Increase for Computer Storage Device Manufacturing

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Source: Bureau of Labor Statistics

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Finally, after grinding to a halt, line-haul railroads have picked up steam. This is good for Warren Buffett, Burlington Northern (BNI - commentary - Cramer's Take), CSX (CSX - commentary - Cramer's Take), Union Pacific (UNP - commentary - Cramer's Take) and Norfolk Southern (NSC - commentary - Cramer's Take).

Year-to-Year Price Increase for Line Haul Railroads

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Source: Bureau of Labor Statistics

So there you have it. Twenty-six stock tips from the U.S. Government. As with any stock tip, this is a starting place for further research. But it is a starting place that I have frequently found to be a useful one.

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At the time of publication, Trent had no positions in the stocks mentioned, although positions may change at any time.

William A. Trent, CFA, is a freelance equity analyst based in the New York metro area. He has been an equity analyst since 1996 and is co-author of Understanding and Evaluating Prospectuses, Offering Documents, and Proxy Statements. Under no circumstances does the information in this column represent a recommendation to buy or sell stocks. Trent appreciates your feedback; click here to send him an email.