Industrial earnings are picking up pace this week.
Raytheon Technologies, 3M, and General Electric each reported early Tuesday morning: Raytheon beat sales and earnings estimates, 3M benefited from higher demand for the company’s health products, and GE posted healthy industrial free cash flow much better than expected by the road.
Investors are now looking forward to some key earnings announcements later this week. Boeing will report on Wednesday and Caterpillar and Honeywell on Friday.
“That was all very good news, but if I look at the industrial space I would be very careful so we’re neutral here. I think all the easy money has been made,” said Mark Tepper, president of Strategic Wealth Partners, said CNBC’s “Trading Nation” Tuesday on the earnings of Raytheon, GE and 3M.
The XLI industrial ETF is up 83% since its March lows and has returned to pre-pandemic highs. The ETF hit a record high just two weeks ago.
“A lot of these stocks have priced in a full rebound and a few more. Last year, when the narrative shifted towards a rebound, a reopening, many of these stocks rebounded and Wall Street seemed to give free rein to any company they had their earnings numbers didn’t meet, you didn’t have to give guidance. Now it’s time to show me, “said Tepper.
The S&P industrial sector is projected to post earnings of $ 30.48 per share in 2021, up 75% from 2020. The coronavirus pandemic had curbed manufacturing activity and demand for industrial companies, a trend that is now reversing in the recovery.
Delano Saporu, founder of New Street Advisors, said it is not too late to get into cyclical industrials.
“If you are a longer term investor looking for more recovery and looking to improve the vaccine rollout, you want to make sure you are in this business and when you are in this business.” Position or buy in this boom, “Saporu said in the same interview.
Boeing in particular is a name that Saporu likes. The company, which is expected to report on Wednesday morning, is expected to report a loss of $ 1.60 per share, which is less than $ 2.33 per share last year.
Disclosure: New Street Advisors trades with Boeing.
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