[cnxvideo id=”655426″ placement=”ros”]The weaker the U.S. dollar gets, the better things look for many of the top industrial stocks, and there is a very simple reason why. Many of the top industrial stocks do a tremendous amount of their overall business and sales outside of the United States. The stronger the dollar is, the more expensive the products they make and sell become. It’s a good bet that the dollar stays weaker, as the Federal Reserve is in no position to raise interest rates, perhaps for the rest of this year. That is a move that should help the industrial sector.
One of the analyst firms we cover here at 24/7 Wall St. is UBS, and its analysts are modestly positive with the overall sector. They have the industrial sector as a whole rated Neutral, and they favor the transportation subsector overall. UBS has four stocks on its list that are the equity preference or bellwether members that pay solid dividends.
Boeing
Shares of this top aerospace industrial company are still down almost 8% since the beginning of the year. Boeing Co. (NYSE: BA), together with its subsidiaries, designs, develops, manufactures, sells, services and supports commercial jetliners, military aircraft, satellites, missile defense, human space flight and launch systems and services worldwide. The company operates in five segments: Commercial Airplanes, Boeing Military Aircraft, Network & Space Systems, Global Services & Support and Boeing Capital.
This company is one of the most preferred stocks at UBS in the industrial transportation subsector. Boeing investors are paid a very solid 3.25% dividend. The Thomson/First Call consensus price target for the stock is listed as $145.72. The stock closed trading on Thursday at $134.42 per share.
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General Electric
This iconic blue chip industrial has been on a strong roll, and the currency tailwinds may help to continue the winning ways. General Electric Co. (NYSE: GE) is a highly diversified, global industrial corporation. Its products and services include power generation equipment, aircraft engines, locomotives, medical equipment, appliances, commercial leasing and personal finance. Wall Street analysts feel that the American giant will be a large player in the efficient energy field.
The company is in the middle of a huge plan that is scaling back many of its operations and returning capital to shareholders. GE has signed deals to sell $166 billion worth of assets in its GE Capital segment. Of that total, $146 billion has closed. GE Capital paid a $7.5 billion dividend to the parent company in the first quarter and is on track to contribute $18 billion in the fiscal year.
The company posted solid first-quarter numbers that were somewhat hampered by slower organic growth. GE does an estimated 52.9% of its total sales overseas, so a weaker dollar surely could help the rest of this year and into 2017.
Investors in GE are paid a solid 3.07% dividend. The stock is listed as a bellwether at UBS. The consensus price objective is at $33.23. The stock closed most recently at $30.09 a share.
Lockheed Martin
Lockheed Martin Corp. (NYSE: LMT) is a top aerospace and defense stock to buy, as many on Wall Street are expecting a very solid continuation of U.S. and foreign defense spending. The company engages in the research, design, development, manufacture, integration and sustainment of technology systems, products and services. The company also provides management, engineering, technical, scientific, logistics and information services. Its Aeronautics segment offers combat and air mobility aircraft, unmanned air vehicles and related technologies.
The company reported first-quarter earnings per share (EPS) of $2.58 on $11.7 billion in revenue. That compares to consensus estimates from Thomson Reuters of $2.59 in EPS on revenue of $11.34 billion. In the same period of the previous year, it posted EPS of $2.74 and $10.11 billion in revenue. In terms of guidance, the outlook for the 2016 full year changed only slightly from the previous levels. The company now expects full-year EPS in the range of $11.50 to $11.80 and revenues in the range of $49.6 billion to $51.1 billion.
Lockheed Martin recently was awarded a $1.27 billion contract for the delivery of 13 F-35 Lightning II aircraft. Six F-35Bs will be going to the Marine Corps, three F-35As to the Air Force and four F-35Cs to the Navy.
Lockheed Martin investors are paid a very solid 2.71% dividend. This stock also is listed as a most preferred company at UBS. The consensus price target is posted at $242.44. The stock closed at $244.94 in Thursday’s trading.
United Technologies
This is a very diversified company with large government contract exposure. United Technologies Corp. (NYSE: UTX) is an industrial that provides high-technology products and services to aerospace industries and building systems worldwide. Its segments are UTC Climate, Otis, Controls & Security, UTC Aerospace Systems, and Pratt & Whitney.
Many Wall Street analysts believe the company is strategically positioned to benefit from two megatrends in the long-term: urbanization and commercial aerospace. The company received good news recently as the military and foreign buyers are set to increase purchase of the F-135 Jets. UTC’s Pratt & Whitney division, which builds the F135 engine for the military, earns a superb 22.5% profit margin on its products.
United Technologies investors are paid a 2.6% dividend. The consensus price target is posted at $111.67. The stock closed Thursday at $101.46 per share.
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With money flowing back to industrials, especially the transportation companies, it makes good sense for growth investors to review their holdings and see if there is a place for any or all of these top most preferred stocks.
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