Zacks Industry Rank Analysis Highlights: Potlatch, Home Depot, Lowes, Hovnanian and Lennar

CHICAGO, Jan. 10, 2013 /PRNewswire/ -- Stocks featured in this week's Zacks Industry Rank analysis include Potlatch Corp. (Nasdaq: PCH), Home Depot (NYSE: HD), Lowes (NYSE: LOW), Hovnanian (NYSE: HOV) and Lennar Corp. (NYSE: LEN).

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Zacks Industry Rank Analysis is written by John Blank, Ph.D, Chief Equity Strategist, Zacks.com.

Construction Jobs on the Rise

What did I find most encouraging about the December ADP private payroll and Federal government jobs reports?

  • A revival in construction jobs. Although ADP said rebuilding after Superstorm Sandy likely lifted their December construction jobs gain, this is nevertheless the seventh month in a row for adds to construction. The +39,000 ADP job adds in construction was the best number since February 2006.
  • ADP financial activities were up +14,000, a 16th month straight positive run. This was the best financial activities job add number since March 2006. This pair of sectors moves together: one finances projects, the other builds them. What a nice positive feedback loop. It takes the overall macro economy system up in a cyclical fashion.

A serial pick-up in jobs means strong underlying profits. Firms don't hire workers unless they make strong profits by doing so. This led me to the Construction Sector to look for stock picks.

(1) Potlatch Corp. (Nasdaq: PCH) is an integrated forest products company with substantial timber resources. It is engaged principally in the growing and harvesting of timber and the manufacture and sale of wood products, printing papers and pulp and paper products. Its timberlands and all of its manufacturing facilities are located within the continental United States (Zacks Rank #1).

(2) Home Depot (NYSE: HD) and Lowes (NYSE: LOW) (Zacks Rank #2).

(3) Hovnanian (NYSE: HOV) and Lennar Corp. (NYSE: LEN) (all Zacks Rank #2). Homebuilders.

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