5 Stocks Worth Considering as U.S. Manufacturing Activity Begins to Recover

U.S. Manufacturing Sector Shows Renewed Strength

After facing challenges for the past three years, the American manufacturing industry is showing encouraging signs of recovery. Despite ongoing issues such as elevated costs and a tightening workforce, recent increases in demand have led to a noticeable uptick in manufacturing activity.

The Manufacturing – General Industrial sector, as classified by Zacks, currently ranks within the top 27% of all industries tracked by the firm. Being in the upper half of the Zacks Industry Rank suggests that this sector is likely to outperform the broader market over the next three to six months.

With this positive outlook, investors may want to consider five manufacturing stocks that have earned a favorable Zacks Rank. These companies are: Parker-Hannifin Corp., Nordson Corp., Watts Water Technologies Inc., Flowserve Corp., and Trimble Inc.. Each of these stocks currently holds a Zacks Rank #2 (Buy).

Signs of Growth in U.S. Manufacturing

The ISM Manufacturing PMI (Purchasing Managers’ Index) recorded growth for the second consecutive month in February, reaching 52.4%. While this was slightly lower than January’s 52.6%, it surpassed the Zacks Consensus Estimate of 51.6%. The New Orders Index also expanded for a second month, hitting 55.8% after four months of contraction.

In January, the ISM Manufacturing Index jumped from 47.9% in December to 52.6%, marking the sector’s strongest performance since 2022 and signaling a return to growth after a year of stagnation.

The New Orders Index surged to 57.1% in January from 47.4% in December, its highest point since February 2022 and the first increase since August 2025. Any reading above 50% indicates expansion in manufacturing.

The following chart illustrates the year-to-date performance of the five highlighted stocks:

Image Source: Zacks Investment Research

Top Manufacturing Stocks to Watch

• Parker-Hannifin Corp.

  Parker-Hannifin is experiencing robust demand in both commercial and military aerospace markets, benefiting from both original equipment and aftermarket sales. Strategic acquisitions have further strengthened its outlook.

  The company’s “Win” strategy has contributed to improved margins and consistent shareholder returns. In April 2025, Parker-Hannifin increased its quarterly dividend by 10% to $1.80 per share. Acquisitions continue to drive revenue growth.

  For the fiscal year ending June 2026, Parker-Hannifin is projected to achieve revenue growth of 7.1% and earnings growth of 13.2%. The consensus earnings estimate has risen by 0.7% over the past month.

• Nordson Corp.

  Nordson is capitalizing on strong momentum in its Medical and Fluid Solutions division. The company is seeing increased demand across packaging, nonwovens, precision agriculture, and consumer non-durable segments.

  Nordson continues to reward shareholders through dividends and share buybacks, while expanding its reach through strategic acquisitions.

  For the year ending October 2026, Nordson anticipates revenue growth of 4.9% and earnings growth of 10.8%. The consensus earnings estimate has improved by 1.4% in the last 30 days.

• Watts Water Technologies Inc.

  Watts Water is reaping the benefits of recent acquisitions, including Haws Corporation, Superior Boiler, and Saudi Cast. These additions are expected to contribute over $130 million in incremental revenue in 2026.

  The company’s focus on cost reduction, strong cash flow, and a healthy balance sheet support its capital allocation strategies. For 2026, Watts Water projects an operating margin between 18.8% and 19.4%, with adjusted margins ranging from 19.1% to 19.7%.

  Watts Water is forecasted to achieve revenue growth of 10.9% and earnings growth of 9.7% this year. The consensus earnings estimate has increased by 3% over the past month.

• Flowserve Corp.

  Flowserve is seeing broad-based strength across its business units, with the Pump Division performing particularly well due to strong aftermarket demand. Growth in bookings from the energy and general industrial sectors is supporting the Flow Control Division.

  The company’s “Diversify, Decarbonize, and Digitize” (3D) strategy, along with recent acquisitions, is driving performance. Flowserve’s commitment to shareholder returns remains strong.

  For the current year, Flowserve expects revenue growth of 6.3% and earnings growth of 12.9%. The consensus earnings estimate has increased by 0.5% in the last 30 days.

• Trimble Inc.

  Trimble is benefiting from rising recurring revenues, especially in its AECO and Field Systems divisions, as more customers adopt its digital and AI-powered solutions. The company’s annual recurring revenue (ARR) is showing significant growth.

  Trimble’s “Connect and Scale” strategy has enhanced its business model and product portfolio, particularly in construction, geospatial, and transportation. The company remains focused on software-driven and AI-enabled growth opportunities.

  Trimble is projected to achieve revenue growth of 7.6% and earnings growth of 12.8% this year. The consensus earnings estimate has improved by 2.6% over the past month.

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