This Day On The Street
Continue to site
ADVERTISEMENT
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

ETFs to Play the Manufacturing Boost

NEW YORK ( TheStreet) -- Strong growth overseas and a pickup in U.S. demand have led to an optimistic future for industrial production and have some insiders suggesting that manufacturing will be at the forefront of the economic recovery.

Recently, reports from the New York and Philadelphia Federal Reserve banks have indicated that manufacturing has accelerated at a faster pace than expected in April. The Federal Reserve Bank of New York's general economic index climbed to a 31.9 from 22.9 in March, marking the ninth consecutive month of growth. Additionally, the Federal Reserve Bank of Philadelphia's general economic index rose to a 20.2 in April from 18.9 in March, marking the eighth consecutive month of expansion.

To further add to the appeal of industrials, factory orders in April increased to 29.5 from 25.4 in March and shipments rose to 32.1 from 25.6 during the same time period. Additionally, the Federal Reserve stated that overall factory production rose 0.9% after increasing 0.2% in February, as the production of consumer goods rose 2%, primarily driven by gains in automobiles, furniture and electronics.

On the manufacturing side, the Institute for Supply Chain Management's manufacturing gauge rose to 59.6 in March, its highest level since July 2004, indicating that manufacturing is expanding.

An indicator suggesting that manufacturing and industrials will likely continue to shine can be found in supply and demand variances seen in the metals markets. According to the London Metal Exchange, stockpiles of copper, aluminum, nickel, zinc and tin continue to decline. Global demand for these metals has been increasing and slowly eating away at supply. In fact, according to Sumitomo Metal Mining, one of the world's largest producers of nickel, world demand for nickel will exceed supply in 2010, the first time this has occurred since 2006.

The momentum behind this uptrend in manufacturing and industrials has been driven by improved capital investment, increases in output of business equipment and increases in consumer and investor confidence. As nations continue to recover, it appears that manufacturing and industrials likely will remain at the forefront of economic growth. With this in mind, here are a few diversified ways one can capitalize on this trend:

  • iShares Dow Jones US Industrials(IYJ), which boasts industrial conglomerate General Electric(GE - Get Report) as its top holding, gives ample exposure to other companies which are likely to reap the benefits of increased manufacturing like 3M(MMM - Get Report). IYJ closed at $61.06 on Thursday.
  • Vanguard Materials ETF(VAW), which holds copper giant Freeport-McMoRan Copper & Gold(FCX - Get Report) and Dow Chemical(DOW), in its top holdings. VAW closed at $73.21 on Thursday.
  • PowerShares DB Base Metals(DBB), which enables one to gain exposure to copper, aluminum and zinc. DBB closed at $23.45 on Thursday.
  • iPath DJ-UBS Nickel TR Sub-Idx ETN(JJN), which gives direct exposure to nickel. JJN closed at $40.72 on Thursday.
1 of 2

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Options Profits

Our options trading pros provide over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • Actionable options commentary and news
  • Real-time trading community
SYM TRADE IT LAST %CHG
DBB $14.55 0.00%
FCX $18.40 0.00%
GE $26.78 0.00%
JJN $15.70 0.00%
IYJ $105.75 0.00%

Markets

DOW 17,730.11 -27.80 -0.16%
S&P 500 2,076.78 -0.64 -0.03%
NASDAQ 5,009.2140 -3.9090 -0.08%

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs