My latest column is up at RealMoney. Here is a summary:

Government economic reports can do more than just indicate the state of the economy. Since many of the reports include industry-level data, digging deeper in the reports can help investors find specific industries to consider more closely. For example, the Bureau of Labor Statistics, which prepares the PPI report, provides detailed information on an industry basis.

Since I wrote about the PPI data in September, the pricing power has shifted to some different industries. Therefore, I thought an update would be in order.

Some of the industries that look interesting are petroleum refineries, industrial gases, computers, computer storage devices, and line-haul railroads.

Disclosure: At time of publication, William Trent has no financial position in the companies mentioned.

Producer prices rose 0.7 percent in April - Yahoo! News

Elevated energy costs pushed producer prices up a slightly more-than-expected 0.7 percent in April, but excluding volatile food and energy costs, prices paid at the factory gate were unchanged, a Labor Department report released on Friday showed.

As the headline (and core) numbers get widely reported, I like to dig a little deeper into the PPI report to find industries that appear to have more (or less) pricing power than normal. If the pricing power has not yet been recognized widely it can occasionally lead to some good stock picks. (All pricing power charts are from the Bureau of Labor Statistics.)
The pricing power in fruit and vegetable canning appears to be helping Del Monte gain some momentum.

Refinery margins hurt Large Cap Watch List (Track at Marketocracy) member Frontier’s (FTO) earnings. Is a turnaround in sight?

One place the pricing power theory definitely didn’t work is in industrial gas. The stocks never weakened, and now pricing power seems to be making a comeback.

Consolidation and pricing power? What’s not to like about Mid Cap Watch List (Track at Marketocracy) and Large Cap Watch List (Track at Marketocracy) member Steel Dynamics’ (STLD - Annual Report) prospects?

Pricing power for industrial valves helped me call the recent earnings pop for Curtiss Wright (CW - Annual Report).

Would you looky what’s happening to semiconductor pricing? Who would have expected that?

Well, that seems like enough for now. Back again next month.

Disclosure: William Trent has a long position in SMH.

The headline PPI number, which is reported on a month/month seasonally adjusted change, is nearly meaningless to us. Instead, we like to look at the report to see if there are any industries that have unexpected or unrecognized gains or declines in pricing power.

Does it work? Well, anecdotes and evidence are two different things - but anecdotally last month’s post got off to a good start. We showed the (then-current) chart on fruit and vegetable canning inflation (the now current is below) and asked if it might signal that it is finally time to buy Del Monte (DLM - Annual Report).

As it turns out, it might have been a good time after all. Here is what happened to Del Monte since:

The pricing power is still creeping up.

We also asked, “With aluminum prices rising, will Alcoa (AA) shares follow?” They did.

The last two months we noted that Air Products (APD) and Praxair (PX) appeared to be defying gravity, as their share prices were rising while their pricing power was falling. The stocks are still high, but pricing power is returning so we’ll scratch that concept for now.

We had found the strength in paint and coating prices mysterious given the slowdown in housing and autos, two big users of paint and coatings. As time passes, the pricing power seems to be evaporating.

With the pricing power in industrial valves, we’re thinking Curtiss Wright’s guidance is too conservative. The shares fell on the news.

And last but not least, things look about as good as they can get for computer makers.

The stock market is purportedly worried by today’s higher than expected producer price inflation headline number, as investors become concerned that Goldilox will burn her lips on some hot porridge. We, on the other hand, take our usual look behind the headline numbers to see which industries are potential winners and losers in the current inflation environment.

Does rising inflation for fruit and vegetable canning suggest it is finally time to buy Del Monte (DLM - Annual Report)?

Price increases in corregated boxes had previously been at odds with bad news from trucking companies. Now it looks like box prices may be rolling over.

Industrial gas prices continue to plummet. Are Air Products (APD) and Praxair (PX) defying gravity?

With aluminum prices rising, will Alcoa (AA) shares follow?

The way industrial valve prices are rising, it is no surprise Curtiss Wright (CW - Annual Report) stock is as well.

Railroads may be running out of steam.

Last but not least, telecom pricing is going through the roof.

Which leads us to ask: why, again, is Verizon getting rid of its lines?

As is our custom, we’ll leave the bickering over the headline PPI numbers and their meaning to others. Instead, we present some of the industries that may be seeing better or worse than normal pricing power. (All grey charts courtesy of the Bureau of Labor Statistics.)
First up is corrugated boxes, which are getting more expensive. This is somewhat confusing, as there doesn’t appear to be much demand for them.

The pricing for industrial gases is getting worse (in sharp contrast to the price charts for Air Products (APD) and Praxair (PX).)

Aluminum is getting more expensive.

Prices for industrial valves are rising at the fastest pace ever, which is probably not priced in at Curtiss-Wright (CW - Annual Report).

Computer prices are declining at a slower pace than normal. On the other hand, how much farther can they decline?

Pricing power for the rails is softening - are the stocks next?

Telephone calls are getting more expensive for the first time since the 1996 Telecom Act.

So those were the ones that jumped out at us this month.