BMO Upgrades Industrial Manufacturers

NEW YORK (AP) — A sustained rebound for industrial manufacturers will significantly increase profits in 2011, said a BMO Capital Markets analyst, who boosted his rating for the sector.

THE OPINION: Analyst Charles Brady said his outlook for manufacturers had improved despite lingering concerns about a global recovery. He expects production volume to continue its comeback. Profit margins will also increase, leading to "meaningful" earnings growth next year, he said.

Demand for such goods collapsed during the recession and to cut spending, companies relied on existing inventories. Spring 2009 is widely believed to be the bottom for demand in the industry, Brady said, and orders have been rising since.

THE STOCKS: Share prices for a number of companies have dropped with the broader market over the past couple months, making them a more attractive buy now, Brady said.

Brady pointed to Bucyrus International Inc. and Joy Global Inc., which make mining equipment; Manitowoc Co., a maker of cranes and foodservice equipment; and Oshkosh Corp., a defense contractor and vehicle and equipment maker, as compelling stock buys. He rates all as "Outperform."

Bucyrus shares rose 55 cents, or 1.1 percent, to $51.20 in afternoon trading. Brady's price target suggests he expects share gains of 80 percent over the next 12 months from Monday's close. Joy Global stock rose 41 cents to $56.85. Brady expects Joy Global shares to rise 38 percent. Oshkosh shares rose 5 cents to $35.31, with a target price suggesting a 56 percent jump in the stock.

While Manitowoc stock slipped 14 cents to $10.91 Tuesday, Brady expects shares to rise 81 percent in the long term.

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