Lost in all of the noise of a slumping, rebounding and slumping-again global economy is a remarkable success story. A wide range of U.S. manufacturers have been sharpening their game, and are now retaining or even taking market share from tough competitors such as Germany, Japan, China, Brazil and elsewhere.
Indeed, the rising tide of exports from U.S. factories to foreign markets has been one of the most under-reported stories of recent years. It's the single biggest factor behind a long string of upside earnings surprises coming out of America's heartland, and I think it's where there are significant gains for investors.
Sadly, the recent market meltdown has rendered this great story moot. Industrial stocks are being sold off aggressively, as if they were simply broken businesses. Sure, the slower global economy will hurt a bit, but these industrial stocks don't deserve the pummeling they've taken.
A quick glance through various earnings forecasts makes you wonder why investors think these businesses are broken. In many instances, analysts expect these companies to actually boost profits over the next few years as they continue to take market share and boost their internal manufacturing efficiencies.
Maybe the analysts are wrong. Perhaps these companies won't deliver the sold profit growth expected of them and will simply generate flat profits until the rest of the world gets back on its feet. We'll get a better read in a month or so when second quarter results start to roll in.