Tickers in this Article: AA, IP, IR, X
Positive economic news in the U.S. continues to pile up, indicating a possible emergence from the worst economic contraction since the 1930s. So which stocks should you buy to take advantage of this resumption of growth?

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The Federal Reserve Bank of Philadelphia recently released its Business Outlook Survey for February 2010. The General Business Conditions diffusion index, which answers the question "what is your evaluation of the level of general business activity?" increased from 15.2 in January to 17.6 in February. This index has now been in positive territory for six consecutive months.

The index of new orders saw a large move up, from only 3.2 in January to 22.7 in February. This survey covers only three states - Pennsylvania, New Jersey and Delaware, but the results are encouraging nonetheless.

The Federal Reserve reported that Industrial Production increased 0.9% in January 2010, after a 0.7% increase in December 2009. Manufacturing production rose 1.0% in January, and is now 1.7% above January 2009. (Learn more about the Federal Reserve, see: The Federal Reserve: What Is The Fed?).

What Does It Mean?
This data is preliminary and will eventually be revised, and the Federal Reserve is also issuing its annual revision to the index of industrial production in June 2010, which can lead to some significant changes, but the data seems to support a recovery.

Housing starts also moved higher in January 2010, with the U.S. Commerce Department reported a seasonally adjusted annual rate of 591,000 units, up 2.8% from December 2009, and 21.5% above January 2009.

Many investors are probably confused due to the media and pundit commentary on the economy, but this sort of sentiment is not unusual and occurred during previous recessions as well.

Stocks Of Interest
There have been many industrial stocks that have sold off as the recent equity rally lost momentum the last few months. Alcoa (NYSE:AA) is one of the largest aluminum producers in the world, and is down about 20% from its recent peak. Analysts have them earning $1.20 in 2011, so if they are correct, you are only paying 11 times earnings for this company that has spent the last two years cutting costs and debt to be ready for the up-turn.

International Paper (NYSE:IP) is another that sold off and looks cheap at 11 times 2011 analyst estimates of $2.12 per share.
Investors also might want to look at US Steel (NYSE:X) trading at 10 times 2011 analyst estimates of $5.14 per share, or Ingersoll-Rand plc (NYSE:IR) at 12 times 2011 estimates of $2.80.

The Bottom Line
The U.S. economy is showing signs that it is emerging from the troughs of the recession, and investors that feel this is the real thing should take advantage of the recent sell off to position portfolios for that recovery. (Learn more about the business cycle, see: Market Cycles: The Key To Maximum Returns).

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