In this article, we will discuss the Best Manufacturing Stocks To Buy Now.
The manufacturing sector stands as a cornerstone of the U.S. economy, significantly contributing to the nation’s gross domestic product (GDP), employment, and technological innovation. According to the National Institute of Standards and Technology (NIST), in 2023, the U.S. manufacturing sector contributed approximately $2.3 trillion to the nation’s Gross Domestic Product (GDP), accounting for about 10.2% of the total U.S. GDP. Additionally, data from the U.S. Bureau of Labor Statistics (BLS) indicated that as of January 2025, the manufacturing sector employs approximately 12.76 million individuals.
Reshoring and Strategic Shifts:
In recent years, the sector has experienced notable trends that are reshaping its landscape. One prominent development is the movement towards reshoring—the practice of bringing manufacturing operations back to the United States. Geopolitical tensions, such as Russia’s invasion of Ukraine, ongoing trade frictions with China, and the aftereffects of the COVID-19 pandemic, have exposed vulnerabilities in global supply chains, prompting companies to reconsider the risks of offshoring. The decline in China’s factory activity and the country’s economic slowdown have also contributed to this shift, as firms seek to reduce their dependency on a single manufacturing hub. In fact, according to a report by CNBC, mentions of “reshoring” in the broader market’s earnings transcripts surged by 128% in the first quarter of 2023 compared to the previous year, outpacing even the rise in discussions about artificial intelligence.
Market Performance and Investment Trends:
Manufacturing stocks have shown resilience over the past year. Despite challenges like inflation and shifting interest rates, the sector has benefited from strong domestic demand and strategic investments in technology. In 2024, greater asset price dispersion across securities, sectors, and countries created strong alpha opportunities for hedge funds. This market dynamic coincided with a significant increase in corporate profits within the U.S. manufacturing sector, which experienced a five-year compound annual growth rate of 11.1%, as reported by NIST.
Outlook and Future Growth Prospects:
The outlook for the U.S. manufacturing sector is cautiously optimistic. Despite ongoing challenges, a focus on innovation and supportive policies position the sector for steady growth. According to a report by Reuters, in January 2025, manufacturing expanded for the first time since 2022, with the ISM manufacturing PMI rising to 50.9—the highest reading since September 2022. Given this, we will take a look at some of the best manufacturing stocks.
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Our Methodology
For this list, we first scanned Insider Monkey’s database of 900 hedge funds as of the third quarter of 2024. Our focus was on selecting manufacturing companies across various sub-sectors within the industry, including industrial equipment, automotive, aerospace, and consumer goods. From this pool of companies, we identified the 10 best manufacturing stocks and ranked them in ascending order based on the number of hedge funds holding stakes in them at the end of Q3 2024.
Why are we interested in 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. Caterpillar Inc. (NYSE:CAT)
Number of Hedge Fund Holders: 50
Caterpillar Inc. (NYSE:CAT) is the world’s leading manufacturer of construction and mining equipment, off-highway diesel and natural gas engines, industrial gas turbines, and diesel-electric locomotives.
Caterpillar Inc. (NYSE:CAT) leadership in heavy machinery and equipment manufacturing is bolstered by its strategic initiatives aimed at innovation and operational excellence. The company continues to invest in technology and process improvements that help it navigate supply chain challenges and cyclical downturns inherent in the industrial sector. As global infrastructure development and construction activities gain momentum, Caterpillar is well-positioned to benefit from increased demand for its products.
As of February 10, 2025, Caterpillar Inc. (NYSE:CAT) has delivered a total return of approximately 200.78% over the past five years, significantly outperforming the broader market’s return of 80.97% during the same period. As of the third quarter of 2024, 50 hedge funds in Insider Monkey’s database owned stakes in CAT.
In Q4 2024, Caterpillar Inc. (NYSE:CAT) reported sales and revenues of $16.2 billion. The company achieved earnings per share of $5.14 in the fourth quarter, surpassing expectations. J.P. Morgan analyst Tami Zakaria maintains an Overweight rating on the stock, with a price target of $435, citing the company’s improved profitability and efficiency.
9. Honeywell International Inc. (NASDAQ:HON)
Number of Hedge Fund Holders: 55
Honeywell International Inc. (NASDAQ:HON) is a global powerhouse in diversified technology and manufacturing. Operating across key segments—including aerospace, building technologies, performance materials, and safety and productivity solutions—Honeywell delivers advanced, integrated solutions that help customers optimize efficiency, safety, and sustainability. Its broad product portfolio and global footprint make Honeywell a stalwart in the industrial sector.
On February 6, 2025, Honeywell International Inc. (NASDAQ:HON) announced plans to split into three independent companies, focusing on automation, aerospace, and advanced materials. This strategic move aims to unlock shareholder value by allowing each entity to pursue tailored growth strategies. The separations are expected to be completed by the second half of 2026. HON is one of the best manufacturing stocks.
In the fourth quarter of 2024, Honeywell International Inc. (NASDAQ:HON) reported revenues of $10.1 billion, a 6.9% increase year-over-year, and adjusted earnings per share of $2.47, surpassing analyst expectations.
Deutsche Bank analyst Nicole Deblase upgraded Honeywell International Inc. (NASDAQ:HON) from ‘Hold’ to ‘Buy’ and raised the price target from $236 to $260 on February 6, 2025. Honeywell International Inc. (NASDAQ:HON) currently has 55 hedge fund holders, according to Insider Monkey’s Q3 2024 database.
