Much has been said about restructuring as companies look to bring production back to their home countries, particularly the US. However, the ramp is just beginning, experts say, so the trend to boost stock values has yet to fully take hold. . Reshoring is essentially companies bringing operations back to their home country from overseas. Supply chain security, a strong U.S. dollar and government stimulus are among the reasons for the uptick, said Brian Belsky, chief investment strategist at BMO Capital Markets. “The recovery mania is real, especially when you keep hearing more and more about this general theme of deglobalization,” he said. “It is a trend that will accelerate especially in the first part of the year,” he added. “The US has learned its lesson from Covid and lockdowns and disruption of supply chains.” The recovery and foreign direct investment are expected to create a record 350,000 U.S. jobs in 2022, according to the Reshoring Initiative, an advocacy group that tracks manufacturing jobs and foreign investment. In the third quarter, corporate announcements were up 20% from the second quarter and 150% from 2019, UBS analyst Chris Snyder wrote in a November note. He pointed to China’s zero-Covid policy and the European energy crisis as two big drivers. “As China’s zero Covid has dragged on, they’ve been closing, but we’re fully reopening,” Snyder told CNBC. “It’s very difficult for a business or a multinational to have your point of supply and your demand operating on very different playing fields, and that makes it difficult to operate … a supply chain.” According to a survey by UBS Evidence Lab, about 87% of US executives operating in China plan to move production outside the country, and about 70% of them are considering the US for a vacation. The online poll ran from June 10 to July 7 and polled 450 senior U.S. executives, even as Apple moves away from China, said tech investor Gene Munster. Of the 150 new manufacturing locations added in 2021, 79% are outside mainland China, and 24 of the 150 are in the United States, he said. “For Apple, it’s more about getting out of China than it is about getting into the U.S.,” said Munster, founder and managing partner of Loop Ventures. The company is looking to move production to India and Vietnam, The Wall Street Journal reported earlier this month. However, semiconductor, automotive and technology hardware companies are leading the way, according to Snyder. Chipmaker announcements in the third quarter were up 500% from the second quarter, while auto was up 100% and tech equipment was up 45%. To bring semiconductor manufacturing back to the U.S., President Joe Biden signed the Chips and Science Act in August. It includes more than $52 billion in tax credits for American computer chip companies and billions more. The best way forward Companies will continue to focus on improving operational efficiency, cutting costs, conserving cash and growing earnings, with North America providing a safe haven, BMO’s Belsky said in a Dec. 8 note. “We believe supply chains will not only move closer to home, but evolve as there is no longer a ‘one-size-fits-all’ solution to major disruptions, but rather a ‘best way’ as opposed to a habit. the cheapest way forward,” he wrote. He expects that industries that produce goods critical to national security, and thus would be potential beneficiaries of various government incentives, would be well-positioned to benefit from restructuring. Those sectors are industrials, materials, healthcare, technology and consumer discretionary. Among the stocks he believes will benefit are those that will help build new plants and equipment, such as AGCO, Illinois Tool Works, Dupont and Freeport-McMoRan. BMO owns all of these companies. On “derivative plays” 2023 Automation is an obvious beneficiary of the restructuring, but it’s a theme that already exists and has been contributing since 2020, UBS’s Snyder said. That includes names like Emerson Electric and Rockwell Automation. Instead, he believes 2023 will be about underrated derivative plays. “Some of the name electricians are really underrated beneficiaries because they have so many touch points throughout the process,” he said. “You have to buy electrical goods when you build a factory. You must purchase an electrical product when you equip that plant. When you connect the grid to that plant, you need electrical components.” The best play in that regard is power management company Eaton, Snyder said. “They sell in the network. You have to build the network when you bring the factories online,” he said. “They sell in factory construction, they sell factory equipment, factory automation.” Keysight Technologies, which provides electronic design and test solutions, is also an interesting play, he said. The company’s equipment is needed by large semiconductor factories because companies test chips as they are manufactured, Snyder said. “As we see this large build at half capacity, it increases the demand for Keysight’s test equipment,” he said. TE Connectivity and Amphenol are two other names he mentioned. Both are subject to automation and electric vehicles. Both play into the automobile, which is one of the top restoring end markets, he said. “When you build a new auto manufacturing facility, their automation businesses make money. Automotive is the most automated industrial end market,” Snyder said. “Then they have big electronics businesses that get paid when the build is done.” — CNBC’s Michael Bloom contributed to the report.