In this article, we will discuss the 10 Best Conglomerate Stocks to Buy According to Hedge Funds.
As per Lloyd Capital, the new year starts on the back of economic resilience. Global conditions remain benign, courtesy of a healthy US economy, moderating inflation, and a gradual easing of global monetary policy. However, investors are required to remain cognizant of the several risks looming. Notably, governments worldwide have fueled economic activity in a way that has deteriorated fiscal positions. Also, inflation is yet to fully return to the respective targeted levels and the geopolitical situation remains uncertain.
As per the investment management firm, investors are required to remain focused on analyzing the quality of the businesses they purchase and ensuring that these are done at prices offering an adequate margin of safety relative to intrinsic value.
S&P 500 to Reach 6,666 in 2025, Says Bank of America
As per BofA’s equity strategy team, led by Savita Subramanian, the S&P 500 index should reach 6,666 by 2025 end. Part of this growth is expected to stem from healthy economic growth. The investment firm’s economics team expects that the US economy should grow at an annualized rate of 2.4% in 2025, higher than Bloomberg consensus forecasts of 2% growth. As a result, the firm has favored companies that are GDP-sensitive and is now going overweight on Financials, Consumer Discretionary, and Real Estate, among others.
Bank of America went on to add that, in 2025, there will be a broadening out of the stock market rally from the “Mag 7” tech stocks to other 493 stocks of the S&P 500 Index. J.P. Morgan also has somewhat similar expectations. Let’s look at that in detail.
READ ALSO: 7 Best Stocks to Buy For Long-Term and 8 Cheap Jim Cramer Stocks to Invest In.
How Can Investing in Conglomerates Provide Support in 2025?
J.P. Morgan believes that equity earnings should broaden moving forward. Equity returns were dominated by “Mag 7” since the beginning of 2023. Over that period, the broader market (S&P 500 index) managed to return 62%, more than half of which was made by Magnificent 7 (delivering 242% over the same period). The strong returns have a solid backing as the Mag 7 were able to grow their earnings at 40%, and the remaining 493 stocks in the index were able to post 2%.
However, J.P. Morgan expects that performance is expected to broaden in 2025 as the remaining “493 stocks” should be able to more than 5 times their earnings growth to 13% in 2025. Therefore, Wall Street analysts believe that investing in companies having a diversified presence should deliver healthy returns in contrast to pure-play (sector-specific) investments. The wealth management firm believes that reduced interest rates, renormalization of inventories and production, and easier comparables are expected to act as potential tailwinds for the cohort over the next year.
Analysts are bullish on businesses with multiple revenue streams and one group that gives investors a diversification advantage is conglomerates. With this in mind, let us now have a look at the 10 Best Conglomerate Stocks to Buy According to Hedge Funds.
A financial analyst at his computer monitor, tracking the public company’s investments.
Our Methodology
To list the 10 Best Conglomerate Stocks to Buy According to Hedge Funds, we used a screener and online rankings. After getting an initial list of 20-25 stocks, we selected the ones having high hedge fund holdings. Finally, the stocks were ranked in ascending order of their hedge fund sentiments, as of Q3 2024.
At Insider Monkey we are obsessed with the stocks that hedge funds pile into. The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
10 Best Conglomerate Stocks to Buy According to Hedge Funds
10) RCM Technologies, Inc. (NASDAQ:RCMT)
Number of Hedge Fund Holders: 7
RCM Technologies, Inc. (NASDAQ:RCMT) provides business and technology solutions in the US, Canada, Puerto Rico, and Europe.
The company’s healthcare business includes working with educational institutions to provide services such as special education staffing, therapy, and nursing services for students with disabilities. RCM Technologies, Inc. (NASDAQ:RCMT) is well-placed for a solid finish to 2024, with Healthcare sector expected to witness 20% revenue growth in school services for the 2024-2025 school year. This growth should stem from expansions in school districts. The company was able to secure more than 20 new school district contracts.
RCM Technologies, Inc. (NASDAQ:RCMT) expects to achieve sustained growth in both Healthcare and Engineering, with a strong pipeline of projects and clients going into 2025. Moving forward, expansion in school-based services is expected to support this business as demand for therapy and nursing services in schools continues to grow because of higher diagnoses of developmental and learning disabilities.
With the healthcare industry increasingly prioritizing home and community-based care, RCM Technologies, Inc. (NASDAQ:RCMT) appears to be well-placed to provide skilled professionals for the services. Wall Street expects the company’s healthcare business to sail through economic fluctuations due to its ability to provide temporary, contract, and permanent staffing.
9) Mammoth Energy Services, Inc. (NASDAQ:TUSK)
Number of Hedge Fund Holders: 7
Mammoth Energy Services, Inc. (NASDAQ:TUSK) operates as an energy services company in the US, Canada, and internationally.
Wall Street analysts opine that Mammoth Energy Services, Inc. (NASDAQ:TUSK) is well-placed to achieve growth from the current juncture. This growth should stem from a cash-rich balance sheet after settling with the Puerto Rican Power Authority (PREPA). The company announced that it received $168.4 million of the $188.4 million owed to its subsidiary through the Settlement Agreement with the PREPA. Therefore, Mammoth Energy Services, Inc. (NASDAQ:TUSK) is now debt-free and plans to invest in both its Infrastructure Services and Well Completion Services divisions over the next year.
In Infrastructure Services, the company plans to invest in additional crews and its engineering services capabilities to better serve the customers. In its Well Completion Services division, Mammoth Energy Services, Inc. (NASDAQ:TUSK) will upgrade pressure pumping equipment to more efficient dual fuel Tier 4 technology. These investments will place the company well to capitalize on rising demand as markets are anticipated to improve later next year. Softness across Mammoth Energy Services, Inc. (NASDAQ:TUSK)’s Well Completion Services markets seem to have bottomed and the company now expects a rebound.
Wall Street believes that Mammoth Energy Services, Inc. (NASDAQ:TUSK)’s infrastructure segment has a strong growth potential, providing electric and telecom infrastructure solutions, from transmission lines to storm repair. This business appears to be well-placed to benefit from increased power demand, mainly fueled by AI growth and frequent extreme weather events.
