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Industrial & Material Sectors On The Move: DE, VMC, LMT, RTX, LHX - YouTube
Channel: TD Ameritrade Network
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it's time for our 360 round live from
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the new york stock exchange and let's
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bring in our expert panel dryden pence
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chief investment officer at pence
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capital management and johnny president
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director of portfolio strategies at
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argus research i love all these pics and
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names that you're taking a look at
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particular stocks but i will start with
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you uh john
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you've got several names on the list
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right you have defense stocks you have a
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name like lockheed martin do you have a
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bowl case scenario here happening john
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oh um yes nicole thanks for having me on
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today and um the industrial sector has
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outperformed this year um despite what's
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going on with inflation and the russian
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invasion but there are some trends that
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are providing
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i'd say tailwind to the group and that's
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a
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pickup in emphasis on defense spending
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and also a focus on
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uh unstarling some of the supply chain
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snags so the aerospace and defense
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stocks are part of the industrial
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sectors and well positioned to take
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advantage of that first trend and then
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the trucking and rails are a big part of
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the supply chain and have an opportunity
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to help improve that part of the economy
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as well so i think it's a good time to
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be looking at the industrial sector
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yeah i see some of your picks i want to
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go through a lot of these in a moment
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dryden
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as you're talking about you said we
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might probably have a pretty uh
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challenging macro environment here you
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do have some names that you're going to
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be talking about such as deer and vulcan
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materials and jacobs but you're worried
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about growth shock for folks tell us
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what that means
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well what that means is you get to an
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area or a period of time when you hit a
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growth shock where where everyone's
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expecting expectations to go up or we
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think growth is going to go up at a
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particular level and then all of a
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sudden uh you know forecasts change and
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then people tend to panic you get
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headline panic on that so you can get
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some over reaction to what are basically
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normal uh adjustments and growth and i
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think that's one of the big challenges
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that we see coming forward so what i
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mean by growth shock is that as growth
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slows down it doesn't go negative but as
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it slows down then people can overreact
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to that and so it's better to pick
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sectors where or individual companies
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that can uh withstand some of these
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macro pressures that are occurring
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yeah and dryden just elaborate you have
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deer vulcan materials jacob's
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engineering has some names that you like
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things should be added to a portfolio
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maybe you could feature one and tell me
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quickly about one of these dryden sure
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well we really like so uh jacobs and
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vulcan particularly vulcan are really
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related to domestic uh production in the
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materials sector because one most of
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this money is coming from uh multiples
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of the infrastructure bill so it's
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government spending uh it's kind of
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insulated from some of this global macro
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confusion where we have with wars and
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everything else is going on so when you
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look at vulcan just one example as you
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is their revenues are about five billion
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a year but in in california and texas
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alone there's 71 billion dollars that's
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probably going to be spent
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uh in materials for infrastructure so
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the suppliers of these things are going
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to have a really strong tailwind we
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believe for the next seven or eight
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years uh and vulcan's dominant in that
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field so they've got a big demand signal
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for their product and reasonably both
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inflationary and global macro insulated
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uh from that so
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we're we're happy with that jacobs as
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well and then deer um you know ukraine
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and russia are both kind of offline a
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little bit in terms of agriculture
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production the us is that a big
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agriculture producer we're going to have
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to get food populations not shrinking
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yeah and so a company like deer that
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helps uh make our agriculture production
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stronger they're going to have high
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demand we believe
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for their equipment and their
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dominant player there
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yeah yeah good stuff there dryden john
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you have some great notes in here i know
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you mentioned the aerospace and defense
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and we talked about lockheed martin you
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also had raytheon and l3 harris in your
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buys list for that group
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and then you go to the rails and the
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trucking group i see canadian
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national union pacific old dominion jb
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hunt these are some of the names you
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like in trucking and rails explain why
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that group too is so important here
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sure well
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i think dryden has teed me up for this
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with his comment on the infrastructure
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spending and the demand for the material
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so the materials are going to have to
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get out of the quarries and and into um
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the the construction sites and that's
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going to be the rails and the trucks
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that are are doing this uh to his point
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these are primarily domestic companies
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canadian national is
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a canada company but
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union pacific is a big west coast
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rail firm
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they both do a lot of
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grain shipments and there's going to be
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an increase in domestic grain shipments
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given what's going on in russia
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uh both of these companies are very
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efficient so volume has been weak for
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the last couple of quarters but they're
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able to push through price hikes and
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increase their margin so good earnings
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growth story the trucking industry is a
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little um more fragmented and there's a
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greater opportunity to get market share
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and the two stocks we like in trucking
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um one is a leader in the less than
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truckload segment old dominion and then
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jb hunt is a more diversified trucking
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company but it has a neat unit which is
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kind of like
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uber for trucks so there's almost a
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high tech angle to jb hunt both of these
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have clean balance sheets records of
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buying back stock and increasing
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dividends and and again they're the the
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domestic companies that are going to be
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delivering the
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commodities that are going to be going
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to you know building the infrastructure
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as part of the infrastructure building
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plan
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yeah and i saw jb hunt the revenue was
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up 28 percent year year-over-year last
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quarter so certainly seeing some some
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growth there and some of the rails we
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were talking about how they are at
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52-week highs it's great to see you both
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thank you great conversation gentlemen i
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appreciate it john and dryden dryden
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pence chief investment officer at pence
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capital management john eid president
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director of portfolio strategies at
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argus research thank you
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you
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