Nomura Securities on U.S. Industrials

Nomura Securities on U.S. Industrials by Shannon O’Callaghan:

Nomura's O'Callaghan said, "The ISM increased to 55.3% in June vs. 53.5% in May with new orders up to 51.6% in June vs. 51.0% in May. We see the increase as modestly encouraging following the steep drop in May but generally consistent with our expectations. While supply chain disruptions from Japan have likely been a factor in the May drop off and June pickup, we think the broader move lower from 60+ levels is consistent with a normal moderation following the 2010 bounce off the industrial bottom. In our view, the May-June ISM trends confirm our recommendation to rotate within the sector towards stocks with stable or later cycle end markets and some non-cycle related levers to pull. We continue to recommend 5 Buy-rated stocks (Danaher (NYSE: DHR), Dover (NYSE: DOV), GE (NYSE: GE), Honeywell (NYSE: HON, United Technologies (NYSE: UTX)) and see DOV and HON as particularly attractive here."

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