This is part of an article from Barrons- issued today:
Ref:
Harley Davidson, Dupont, and More Stocks That Will Win After the Chip Shortage | Barron's (barrons.com) I would guess that LNR may see a boost in production as the chip shortage winds down.
cleareye
Semiconductors of all shapes and sizes will remain scarce well into next year, but BMO Capital Markets says the worst of the shortage may well be past. In a Thursday research report, it suggested a few companies, beyond the obvious winners, that might benefit.
Since the first signs of the shortage began to appear over a year ago, chip producers have been seeking to tackle the problem. They have announced plans for vast amounts of capital spending to expand production capacity, and other measures to ramp up their output. Auto makers clearly stand to gain as those efforts bear fruit, given that their production has been constrained by a lack of chips, but there are many other winners, according to BMO Capital.
Chemical companies: Producers of chemicals don’t use chips for their own products, but BMO analyst John McNulty said they have been hurt because their products are used by auto makers. Several names he covers— DuPont (ticker: DD), PPG Industries (PPG), Axalta Coating Systems (AXTA), Ingevity (NGTV), Chemours (CC), and Celanese (CE)—have at least 10% of sales ultimately tied to auto makers.
McNulty said that revenue will likely pick up in the second half of 2022, or in 2023, when auto production swings up. “We believe the names exposed have a relatively clear runway ahead and largely offer compelling risk/reward profiles,” he said.
Leisure: Like car makers, companies that make vehicles for all sorts of outdoor recreation—from motorcycles to snowmobiles and small boats—have suffered from a lack of chips. BMO’s Gerrick Johnson wrote that companies such as Harley-Davidson (HOG), BRP (DOO. Toronto), and Polaris (PII), are increasingly saying that chips are the primary reason they are experiencing slowed production. Previously, shortages of labor and materials such as foam were causing problems.
Recreational-vehicle manufacturers appear less concerned about chip shortages, according to Johnson. RVs, made by the likes of Thor (THO) and Winnebago (WGO) don’t use many chips, and their internal accessories—TVs and microwaves, for example–are easy to swap if one model isn’t available. Johnson said that chips are one of many components companies are having trouble getting, and that most don’t expect to reach normal inventory levels late into 2022, or even 2023.
Trains: Another potential winner is railroads, again because of the companies’ exposure to sales of autos. BMO’s Fadi Chamoun said that rail transportation stocks should gain as increased car production leads to higher shipments. Chamoun pointed out that In the third quarter of this year, the volume of motor vehicles shipped by rail was down 9.3% from a year earlier, though that was better than the 11.5% year-over-year decline in the second quarter.
Chamoun wrote that his team views weak automotive production as equivalent to deferred revenue, and that conditions will return to prepandemic levels by 2023. CSX (CSC) moves the most vehicles, folowed by Norfolk Southern (NSC), and Kansas City Southern (KSU). Chips: The outlook is less clear for the chip stocks themselves. Analyst Ambrish Srivastava outlined two scenarios as the supply issues ease: a “soft landing” where the stocks, boosted by the shortage, don’t get hurt too badly. The second is a “hard landing” scenario where stocks go south rather quickly.
Unfortunately, he said, it’s hard to figure out which one is more likely at this point.