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Jabil, Flex, and Other Stock Picks to Benefit From More U.S. Jobs, Investments – Barron’s

Burlington Stores signage in New York

Christopher Lee/Bloomberg

Companies have more incentives to bring jobs back to the U.S., leading to a rise in “reshoring” announcements. The trend is likely to gain steam because of the new climate and healthcare act that President Biden signed on Tuesday, as well as the Chips Act that incentivizes domestic semiconductor production. Companies need to make more products in the U.S. to qualify for subsidies. 

That money adds to a list of reasons companies are bringing jobs back. Global supply-chain problems, trade wars and security concerns have made reshoring popular again. The long trend toward globalization has reversed.

A nonprofit called the Reshoring Initiative tracks the number of reshoring announcements, and foreign direct investments, or FDI, in U.S. jobs—such as a foreign battery-maker opening a factory in the U.S. In 2021, the number of jobs related to reshoring, and foreign investment rose to a record of 261,000, up from 160,000 the year before. “Additionally, the number of companies reporting new reshoring and FDI set a new record of over 1,800 companies,” the Reshoring Initiative reported. 

Bank of America analyst Jill Carey Hall wrote that the trend is likely to help small and mid-cap stocks more than large-caps. Growing domestic capital spending tends to benefit smaller stocks, which often sell more of their products to U.S. customers. Historically, small cap sales have an 85% correlation to U.S. capital expense growth, versus 65% for large-caps, according to Carey Hall.

She thinks that the trends could benefit companies in several industries, including manufacturing, tech, retail, healthcare and finance. For some companies, the benefits seem obvious—chip makers that will see direct gains from federal money, for instance. But for others, the benefits are less direct. Carey Hall, for instance, expects discount retailers like Burlington Stores
? to benefit as workers have more money in their pockets.

“In the years pre-COVID, the off-price sector benefited as minimum-wage increases helped lower-income consumers,” she wrote. “Given most manufacturing jobs target lower earning workers, any localization and reshoring effort creating more jobs at higher wages would disproportionately benefit off-price’s target customers.”

In total, Carey Hall found 26 stocks that could benefit. Their median market cap is $12 billion, meaning several may be large enough to be considered large-caps.

Those stocks are Rockwell Automation ( ROK
), Fortive ( FTV
), PTC (PTC), Ansys (ANSS), Jabil ( JBL
), Flex ( FLEX
), onSemi ( ON
), GlobalFoundries (GFS), Nova ( NVMI
), Camtek ( CAMT
) Jacobs Engineering Group (J) United Rentals (URI) EastGroup Properties (EGP), LXP Industrial Trust (LXP), Stag Industrial (STAG), KeyCorp (KEY), Fifth Third Bancorp (FITB), Huntington Bancshares (HBAN), Synovus Financial (SNV), Comerica ( CMA
), Cullen/Frost Bankers ( CFR
). Owens & Minor (OMI), Cardinal Health (CAH), Premier ( PINC
), Burlington Stores ( BURL
), and Ross Stores (ROST).

Write to Avi Salzman at

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