by Krymzen Hall

Created on: June 03, 2009   Last Updated: June 11, 2009

Economic indicators are like weathervanes. Decades ago, when people feared bad weather, they would look on top of their houses, watch the direction of the arrows, determine which way the wind was blowing, and to their chagrin, realize that a hurricane was nearing.

But technology has evolved. Now Doppler radar predicts storms, just as indexes predict the future growth of the nation's economy.

The Institute for Supply Management (ISM), provides an economic weathervane of sorts, called the manufacturing index. This index, which represents manufacturing growth, measures the success or decline of the manufacturing industry numerically. Lately, its number has dropped below 50, a sign of recessive times. Although climbing, the peak over 50 still eludes America. And investors watch, with bated breath, deciding when and where to run for cover, as they try to weather the financial crisis.

But this does not mean that Americans should stop investing in the manufacturing industry. Smart companies thrive in down times. Here are two that continue to weather the storm.

Simpson Manufacturing (SSD), has a capital surplus which compensates for its cash flow issue. On the surface, this company seems to be teetering. But it carries no long term debt, and in 2007 and 2008, had a positive cash flow. The exchange rate change holds some culpability in Simpson's cash flow deficiency, which has little to do with management, so leadership is not in question. Its retained earnings prove that the company is confident enough to invest in itself. And with the five-year PEG ratio at 31.40, this company should continue to see growth, when comparing this figure to the current trailing P/E ratio of 28.65. Plus, according to its balance sheet, retrieved from www.finance.yahoo.com, stockholders have not seen a decline in their equity over the last three years.

In 2009, Virco Manufacturing (VIRC), a primary supplier of educational furniture, more than doubled its cash flow from 2008, as reflected in its balance sheet, retrieved from www.finance.yahoo.com. And with less inventory from the prior year as well, Virco bettered its cash position through sales without offering additional stock options. Even though the company has taken a hit over the past year with its net income, rapid inventory movement and debt reduction management make this a solid investment. And according to Virco's 2008 annual report, they have sustained asset growth and have increased its stockholders' equity per share by approximately 19 percent since 2004. The company has stable, tenured management, which adds to the security of this stock.

With careful research, a smart investor will find a manufacturing company worth investing in. For help finding the right stock, please visit Power Options on the web, www.poweropt.com. Power Options offers tips as well as an entire learning center devoted to the individual investor.

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