Labor and industry and flexing their muscles right now in what is being called a worker’s market. Autoworkers are on strike. Unionized pilots just got record pay raises out of all the major airlines. The Teamsters union wrung concessions from United Parcel Service (NYSE:UPS). And union drives continue at American companies as diverse as Starbucks (NASDAQ:SBUX) and Amazon (NASDAQ:AMZN). At the same time, the federal government is spending $1.25 trillion on infrastructure projects across the country to improve roads, bridges, railway corridors, and more. Governments at the state and municipal levels are also investing heavily in construction projects. The Brookings Institution is calling this “America’s Infrastructure Decade.” It’s all contributing to a blue-collar bull market.
Ford Motor (F)
Ford Motor (NYSE:F) seems to be doing better than its rivals when it comes to negotiating with the autoworker unions.
For one, Ford reached a new labor pact with more than 5,000 autoworkers in Canada, narrowly averting a strike that could have impacted its vehicle production. Then, the United Auto Workers (UAW) union in the U.S. announced that it would not expand its strike action against Ford. While a collective agreement between the two has not yet been reached, the union says progress is being made.
In addition, the resolution of bargaining in Canada comes as a relief. Without that, Ford would have had to contend with labor issues on both sides of the border. Plus, a strike in Canada would have impacted the production of the Ford Edge and Lincoln Nautilus crossover vehicles.
FedEx (FDX)
Shares of FedEx (NYSE:FDX) are rallying, with UPS finding itself embroiled in labor negotiations.
Helping, FedEx just reported better-than-expected financial results and raised its full-year guidance. For its latest quarter, FedEx reported earnings per share (EPS) of $4.55 on revenue of $21.7 billion. Analysts forecast EPS of $3.71 from sales of $21.7 billion. The company also said earnings were given a big lift by internal cost-cutting, as well as events such as the UPS labor negotiations and the bankruptcy of Yellow Corp. Looking ahead, FedEx said it expects to earn between $17 and $18.50 a share for its full 2024 fiscal year.
Boeing (BA)
Boeing (NYSE:BA) is a major American manufacturer, employing more than 150,000 blue-collar workers. It’s also one of only two commercial aircraft manufacturers in the world along with France’s Airbus SE. Given its competitive strength and its global duopoly in the manufacture of commercial aircraft, Boeing could be a good long-term holding for investors with time and patience.
Granted, Boeing has had its share of problems. Its stock was knocked lower after the company warned that a new manufacturing flaw in its 737 Max aircraft is likely to delay deliveries to its airline customers worldwide. It also found fastener holes on the aft pressure bulkhead on some 737 Max aircraft were improperly drilled, which needs repair. However, Boeing stressed that the bulkhead problem is not a safety issue. Despite the hiccup, Boeing has raised its monthly production to 38 aircraft from 31 previously.
McDonald’s (MCD)
McDonald’s (NYSE:MCD) just said it would raise the royalty fees it charges new U.S. restaurant franchises. Specifically, McDonald’s said that it is raising the fee that new franchise operators must pay to license the McDonald’s brand to 5% from 4% as of Jan. 1. The company said the increased royalty fee will help it to maintain its “competitive edge.”
That royalty fee hike also comes after McDonald’s beat Wall Street expectations with second-quarter financial results. Better, a growing number of analysts are turning bullish on McDonald’s, which they feel is a good bet if the economy falls into a recession.
Caterpillar (CAT)
After struggling during the pandemic, Caterpillar (NYSE:CAT) is on a tear once again. At the moment, the company is riding high on renewed infrastructure spending by governments at all levels. That’s in addition to rising demand for its mining machinery.
Moving forward, Caterpillar is well-positioned for continued growth given that most of its business remains in North America. Also, while construction and mining activity in the U.S., Canada, and Mexico remains strong, activity and demand are beginning to wane in other areas, notably China and Europe, where the economies are cooling much faster under the weight of high-interest rates. Caterpillar’s positioning in North America insulates it from international headwinds.
Walmart (WMT)
UBS analyst just upgraded Walmart (NYSE:WMT) to a “buy” rating, with a $190 price target. All thanks to growing strength in its online sales channel and increasing dominance in groceries. Helping, Walmart is the largest grocery retailer in America, outpacing both Costco (NASDAQ:COST) and Kroger (NYSE:KR).
In addition, Walmart’s earnings continue to be impressive. The company recently raised its full-year guidance after beating Wall Street expectations for its second-quarter results. In fact, same-store sales increased 6.4% year over year, with e-commerce sales up 24%. In addition, the company now expects full-year sales to increase between 4% and 4.5% which is ahead of previous guidance of sales gains of 3.50%.
General Electric (GE)
General Electric (NYSE:GE) is in the process of splitting into separate entities, which will include GE Aerospace, GE Vernova (the power generation business), and GE HealthCare Technologies. GE executives have said they want all the businesses to have investment-grade credit ratings when they become independent companies with strong franchises in their respective industries. To that end, GE is allocating its free cash flow to the new companies. Wall Street expects GE’s cash flow in Q3 of this year to total about $900 million.
