Australian manufacturing is not dead, but it's fighting hard. If a company has a full-scale manufacturing plant in Australia then you can rest assured that they are incredibly efficient. If the market falls again then there are several good manufacturing shares to buy.
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Shipbuilding pioneer
Austal Limited (ASX: ASB) is down by more than~13% since announcing on Monday that it had secured US$50 million in government funding. The funding is designed to maintain, protect, and expand US Domestic Production of steel shipbuilding over the next 24 months, beginning June 2020. This announcement underlines the value of Austal to the US defence forces and the importance to the shipbuilding industry there.
I find Austal to be a wonderful company that executed a fantastic turnaround when David Singleton took over. His recent departure leaves the company in the capable hands of former Chief Operating Officer, Patrick Gregg. Alongside the government funding the company also recently won a $43 million contract modification for the Littoral Combat Ships (LCS).
Other recent announcements include raising of FY20 guidance for group revenue by $100 million and the award of a contract for $350 million to build 6 cape-class patrol boats in Australia.
Before many recent announcements, the company already had a forward order book of $4.3 billion. In my view, this company is very undervalued and provides investors with a good share at a great price.
Australian packaging shares to buy
The Orora Ltd (ASX: ORA) share price has crashed by ~23% since the share went ex-dividend on 19 June. This points to the current practice of short-term dividend harvesting occurring to try to replace dividends that have been suspended. Nevertheless, it provides investors with a horizon of, say, 1 year, an opportunity to buy a cheap stake in a good company.
Over a 6 year period, the company has managed to grow its earnings per share (EPS) by an average of 24.9% a year. This has been largely due to continuing efficiency improvement as the company's sales growth has been only about 6% per year.
Not often discussed is the company's performance in the US markets. Orora is one of the top 5 providers in the US$50 billion packaging sector. It also owns an advertising company, Orora Visual. This is in the top 4 of the US$10 billion points of purchase and displays segment. I think this is a great share to buy for medium-term capital growth.
Foolish takeaway
Every time the market moves as one there are almost always a lot of shares to buy. This is particularly true with manufacturing shares. While many investors are bedazzled by the performance among the buy now pay later and tech shares, there are very sound companies with a long track record that are on sale at dirt cheap prices.
