Today's economic data reveals U.S. GDP is the highest its ever been... higher than before:
--The financial crisis
--The worst recession since WWII
--The U.S. downgrade
--The European debt crisis.
Attentive readers will note we are showing real GDP (not nominal) in order to account for inflation... and output is still higher. This is good.
Attentive readers will also note to the increase is due largely to higher government and consumer spending, not investment. This is bad.
Readers: We share your concern, especially since stocks tend broadly to follow capital expenditure cycles.
So, are we still happy? Yes. On Monday we learned capital goods orders ex-defense rose 9.1 percent during July, marking the fourth consecutive monthly gain. Good news for bulls, and certainly one reason why today's GDP data surprised top the upside (2.5 percent QoQ vs 2.2 percent estimated). As goes investment, so go stocks.
Today we screen for companies increasing their capital expenditures the most this year. Within the S&P 1500, we found 203 profitable companies reinvesting at least 1 percent of sales into their businesses. We admit we wish the number of companies were higher, we highlight the top ten:
The group of 203 is up 25.3 percent this year (vs 15.4 percent for the S&P 1500), further evidence of the relationship between investment and CapEx pictured in chart #3. For the benefit of blog readers, here are the next 15 CapEx growers: Applied Industrial Technologies (AIT), Linear Tech (LLTC), Align Technology (ALGN), Pall Corp (PLL), Coherent (COHR), Hillshire Brands (HSH), Acxiom (AXCM), International Game Technology (IGT), Autodesk (ADSK), Green Mountain Coffee Roasters (GMCR).