• Subscribe
  • Log In
  • Home
  • Daily Diary
  • Asset Class
    • U.S. Equity
    • Fixed Income
    • Global Equity
    • Commodities
    • Currencies
  • Sector
    • Basic Materials
    • Consumer Discretionary
    • Consumer Staples
    • Energy
    • Financial Services
    • Healthcare
    • Industrials
    • Real Estate
    • Technology
    • Telecom Services
    • Transportation
    • Utilities
  • Latest
    • Articles
    • Video
    • Columnist Conversations
    • Best Ideas
    • Stock of the Day
  • Street Notes
  • Authors
    • Doug Kass
    • Bruce Kamich
    • Jim Cramer
    • Jim "Rev Shark" DePorre
    • Helene Meisler
    • Jonathan Heller
    • - See All -
  • Options
  • RMPIA
  • Switch Product
    • Action Alerts PLUS
    • Quant Ratings
    • Real Money
    • Real Money Pro
    • Retirement
    • Stocks Under $10
    • TheStreet
    • Top Stocks
    • Trifecta Stocks
  1. Home
  2. / Investing
  3. / Industrials

The Tide Could Turn in Non-Residential

Construction in this area has badly lagged, but recent data suggest it is now poised for improvement.
By STEPHANIE LINK Feb 20, 2014 | 02:00 PM EST
Stocks quotes in this article: ETN, JCI, HON, SWK, LII, WSO

One theme for 2014 on which we've been very bullish in Action Alerts PLUS has been the expected recovery in the non-residential construction market.

Thus far, this area has badly lagged the recovering residential market, and we watch the monthly Architectural Billings Index on a regular basis as a gauge on a potential pick-up in activity. The ABI is a leading indicator for non-residential construction demand, and it carries a nine-to-12-month lag between billings and the actual pick-up in construction. Well, in January the ABI rose back above the 50 expansionary figure to 50.4 vs. last month's 48.6. In addition, it has now seen expansion in 15 out of the last 18 months.

Since it's a volatile series, we usually look at the ABI's three-month moving average. That currently stands at just under 50 due to softness in both November and December -- but 49.6 is still a solid number, and the six-month average is 51.3. December's six-month mean had been 51.8.

Meanwhile, January's new-projects-inquiries index is 58.5, and the three-month average stands at 58.7.

By region, billings in the West and South have been the strongest of late, having registered above 50 for four consecutive months. That's been offset by weakness in the North and Midwest, whose results have likely been impacted by weather: Both regions have come in below 50 for the last three months.

Overall, the news constitutes another piece of evidence that the non-residential market is poised for improvement.

Stocks that will benefit for the long term are Eaton (ETN), Johnson Controls (JCI), Honeywell (HON), Stanley Black & Decker (SWK), Lennox (LII) and Watsco (WSO).

Get an email alert each time I write an article for Real Money. Click the "+Follow" next to my byline to this article.

Action Alerts PLUS, which Link co-manages as a charitable trust, was long ETN, HON and JCI.

TAGS: Investing | U.S. Equity | Industrials | Real Estate | Stocks

More from Industrials

Here's the Boeing Trade I Made Today

Timothy Collins
Feb 24, 2021 12:06 PM EST

I love this chart and I'm woefully underexposed in this area.

Caterpillar Is Ready for Further Gains After a Shallow Correction

Bruce Kamich
Feb 23, 2021 1:36 PM EST

Here's where there might be a buying opportunity.

Whether Active or Passive, These 2 Deep-Value Portfolios Are Shining

Jonathan Heller
Feb 22, 2021 10:30 AM EST

Four months in, the 2020 Triple Net Active Versus Passive Portfolio experiment is proving to be a rewarding experience.

Screening for Quality Defensive Stock Plays Yields a Woefully Small Bunch

Jonathan Heller
Feb 19, 2021 11:00 AM EST

The pickings are slim when it comes to stocks that can meet the stringent standards of a stock screen based on Benjamin Graham's principles.

Cummins Reaches Our Target, Time to Nail Down Some Profits

Bruce Kamich
Feb 10, 2021 1:55 PM EST

CMI is a major China play.

Real Money's message boards are strictly for the open exchange of investment ideas among registered users. Any discussions or subjects off that topic or that do not promote this goal will be removed at the discretion of the site's moderators. Abusive, insensitive or threatening comments will not be tolerated and will be deleted. Thank you for your cooperation. If you have questions, please contact us here.

Email

CANCEL
SUBMIT

Email sent

Thank you, your email to has been sent successfully.

DONE

Oops!

We're sorry. There was a problem trying to send your email to .
Please contact customer support to let us know.

DONE

Please Join or Log In to Email Our Authors.

Email Real Money's Wall Street Pros for further analysis and insight

Already a Subscriber? Login

Columnist Conversation

  • 11:32 AM EST JAMES "REV SHARK" DEPORRE

    This Weekend on Real Money

    Navigating a Market Correction
  • 11:29 AM EST GARY BERMAN

    Where Does the Nasdaq Go From Here?

    Where does the Nasdaq Composite (CCMP) index go fr...
  • 12:31 PM EST GARY BERMAN

    Has the Short-Term Top Come for the XLF/Banks?

    The has triggered a long-term overbought signal ...
  • See More

COLUMNIST TWEETS

  • A Twitter List by realmoney
About Privacy Terms of Use

© 1996-2021 TheStreet, Inc., 225 Liberty Street, 27th Floor, New York, NY 10281

Need Help? Contact Customer Service

Except as otherwise indicated, quotes are delayed. Quotes delayed at least 20 minutes for all exchanges. Market Data & Company fundamental data provided by FactSet. Earnings and ratings provided by Zacks. Mutual fund data provided by Valueline. ETF data provided by Lipper. Powered and implemented by FactSet Digital Solutions Group.

TheStreet Ratings updates stock ratings daily. However, if no rating change occurs, the data on this page does not update. The data does update after 90 days if no rating change occurs within that time period.

FactSet calculates the Market Cap for the basic symbol to include common shares only. Year-to-date mutual fund returns are calculated on a monthly basis by Value Line and posted mid-month.

Compare Brokers

Please Join or Log In to manage and receive alerts.

Follow Real Money's Wall Street Pros to receive real-time investing alerts

Already a Subscriber? Login