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.
8. Applied Materials Inc. (NASDAQ:AMAT)
Number of Hedge Fund Holders: 74
Applied Materials Inc. (NASDAQ:AMAT) is a leader in materials engineering solutions that drive semiconductor chip and advanced display production. The company’s innovative equipment and software are critical to powering next-generation electronics and energy-efficient devices.
As of February 10, 2025, Applied Materials Inc. (NASDAQ:AMAT) has delivered a return of about 12.93% year-to-date, outperforming the broader market’s gain of approximately 3.14%. This strong performance demonstrates the company’s ability to capitalize on rising demand in the semiconductor industry amid rapid technological change and increased data center investments.
In fiscal year 2024, Applied Materials Inc. (NASDAQ:AMAT) reported revenue of approximately $27.2 billion and net income of around $7.2 billion. The company generated robust cash flows, with operating cash flow near $8.7 billion and free cash flow of roughly $7.5 billion. With such healthy metrics, the company continues to expand its portfolio in chip efficiency and advanced display technologies while maintaining a strong balance sheet that supports future innovation.
On January 17, 2025, KeyBanc analyst Steve Barger upgraded the stock from ‘Hold’ to ‘Buy’ and set a price target of $225, citing the company’s strong market position and growth prospects. AMAT is one of the best manufacturing stocks on our list.
7. Exxon Mobil Corporation (NYSE:XOM)
Number of Hedge Fund Holders: 86
Exxon Mobil Corporation (NYSE:XOM) is a global energy leader that integrates oil and gas production, refining, and chemical operations. Its diversified business model and scale help the company deliver steady performance in a volatile market.
In fiscal year 2024, Exxon Mobil Corporation (NYSE:XOM) reported revenue of approximately $349.5 billion and net income of about $33.6 billion. The company generated robust cash flows, with an operating cash flow of around $55 billion and a free cash flow near $34.4 billion. These figures highlight its operational efficiency and ability to convert earnings into cash, supporting dividends and strategic investments. Exxon Mobil Corporation (NYSE:XOM)’s scale and financial strength provide stability despite fluctuating oil prices and global economic uncertainties.
J.P. Morgan analyst John Royall has maintained an Overweight rating on Exxon Mobil Corporation (NYSE:XOM). In a report released on January 2, 2025, Royall set a price target of $125.00 for the stock.
Notably, 86 hedge funds in Insider Monkey’s Q3 2024 database held shares of Exxon Mobil Corporation (NYSE:XOM), reflecting strong institutional confidence in its prospects.
6. 3M Company (NYSE:MMM)
Number of Hedge Fund Holders: 82
3M Company (NYSE:MMM) is a diversified industrial conglomerate renowned for its innovative products across sectors such as safety, industrial, transportation, electronics, and consumer solutions.
As of February 10, 2025, 3M Company (NYSE:MMM) has achieved a year-to-date (YTD) return of over 15%. Over the past five years, the company’s total return stands at about nearly 11%.
In the fourth quarter of 2024, 3M Company (NYSE:MMM) reported sales of $6.0 billion, marking a 0.1% increase year-over-year. The adjusted earnings per share (EPS) from continuing operations was $1.68, down 2% YoY. For the full year 2024, the company posted net sales of $23.6 billion with organic growth up 1.2% YoY.
The company achieved earnings per share (EPS) of $7.30, marking a 21% increase compared to the previous year. Additionally, the adjusted free cash flow stood at $4.9 billion, underscoring 3M Company (NYSE:MMM)’s financial strength and its ability to fund ongoing investments and shareholder returns.
Recent developments include the appointment of CEO William Brown in 2024, who has initiated restructuring efforts to streamline operations and enhance profitability. The company has also focused on innovation, launching new products such as the LCD 2.0 platform and Beam optics for data centers.
Analyst Andrew Obin from Bank of America Securities maintains a ‘Strong Buy’ rating on 3M Company (NYSE:MMM) with a price target of $175, citing the company’s strategic initiatives and potential for improved profitability.
5. GE Aerospace (NYSE:GE)
Number of Hedge Fund Holders: 95
GE Aerospace (NYSE:GE) is the aerospace arm of General Electric, focused on developing and servicing advanced jet engines and aerospace systems. The division is positioning itself for a turnaround by leveraging new product introductions and digital innovations to enhance efficiency and sustainability.
As of February 10, 2025, GE Aerospace (NYSE:GE) has achieved a year-to-date return of approximately 23.19%. In fiscal 2024, GE Aerospace generated adjusted revenue of approximately $35.1 billion, reflecting a 10% year-over-year increase, and delivered an adjusted EPS of $4.60, marking a 56% growth compared to the previous year. The division produced an operating cash flow of $5.8 billion and reported a free cash flow of $6.1 billion, underscoring its capacity to generate solid cash flows while working to improve margins and reduce costs through operational efficiencies.
Recent developments have further bolstered GE Aerospace’s (NYSE:GE) outlook. The company has secured a five-year Performance-Based Logistics (PBL) contract with the Indian Air Force (IAF) to provide comprehensive sustainment solutions for T700-GE-701D engines powering the IAF’s fleet of AH-64E-I Apache helicopters. This contract positions GE Aerospace to strengthen its footprint in global defense markets, ensuring engine availability through Maintenance, Repair, and Overhaul (MRO) services and enhancing the operational readiness of the Apache fleet.
On January 27, 2025, Bank of America Securities raised its price target for GE Aerospace (NYSE:GE) to $225.00, maintaining a “Buy” rating.
4. Thermo Fisher Scientific Inc. (NYSE:TMO)
Number of Hedge Fund Holders: 98
Thermo Fisher Scientific Inc. (NYSE:TMO) is a global leader in serving science, offering a wide range of life sciences solutions, analytical instruments, specialty diagnostics, and laboratory products. With annual revenues exceeding $40 billion and a market cap of over $200 billion, the company is well-positioned to benefit from growing demand in drug development and research.
In its recent Q4 report, Thermo Fisher Scientific Inc. (NYSE:TMO) posted revenue of about $11.4 billion, reflecting a 5% increase year-over-year, and beat analyst expectations with adjusted earnings of $6.10 per share versus the forecasted $5.95. Strong demand for its comprehensive suite of products, particularly in the Laboratory Products and Biopharma Services segments, helped drive this performance. The company also generated robust cash flow, with operating cash flow around $8.7 billion and free cash flow near $7.3 billion, supporting both its organic growth initiatives and strategic acquisitions.
Institutional confidence in Thermo Fisher Scientific Inc. (NYSE:TMO) is very high, with about 90.8% of its shares held by institutions. Notably, approximately 98 hedge funds in Insider Monkey’s Q3 2024 database included Thermo Fisher Scientific Inc. (NYSE:TMO) in their portfolios, reflecting its reputation as a stable, long-term investment.
Raymond James analyst Andrew Cooper reiterated an “Outperform” rating on Thermo Fisher Scientific Inc. (NYSE:TMO), raising the price target from $650.00 to $667.00 on February 3, 2025. Cooper highlighted the company’s strong performance and strategic initiatives as key drivers for future growth.
3. Danaher Corporation (NYSE:DHR)
Number of Hedge Fund Holders: 98
Danaher Corporation (NYSE:DHR) is recognized as one of the top-tier manufacturing stocks due to its diversified portfolio and disciplined growth strategy. The company operates in key segments like life sciences, diagnostics, and environmental and applied solutions. This diversification shields Danaher Corporation (NYSE:DHR) from the cyclicality of any single market while fueling innovation in advanced manufacturing processes, a cornerstone of its competitive edge.
Danaher Corporation (NYSE:DHR) recently reported revenue near $24 billion. Danaher’s diversified portfolio across Biotechnology, Life Sciences, and Diagnostics contributed to its operating profit of $4.86 billion, with an operating margin of 20.4%. The company’s recurring revenue models, particularly in bioprocessing and molecular testing, have been pivotal in delivering consistent earnings. Additionally, operating cash flow totaled $6.7 billion, and free cash flow was $5.3 billion, demonstrating robust liquidity that supports both organic growth and strategic acquisitions. CEO Rainer M. Blair emphasized the company’s transformation into a focused life sciences and diagnostics innovator, positioning Danaher for higher long-term growth and margin expansion.
Institutional investors demonstrate significant confidence in Danaher Corporation (NYSE:DHR), with approximately 98 hedge funds in Insider Monkey’s Q3 2024 database holding positions in the stock, underscoring its appeal as a stable and innovative manufacturing leader.
On January 30, 2025, Patrick Donnelly, an analyst at Citigroup, maintained a “Buy” rating on Danaher Corporation (NYSE:DHR) but adjusted his price target from $285 to $265. This revision suggests an anticipated upside of approximately 28% from the current price of $206.76 as of Feb 10, 2025.
2. Tesla Inc. (NASDAQ:TSLA)
Number of Hedge Fund Holders: 99
Tesla Inc. (NASDAQ:TSLA) is a prominent player in the electric vehicle (EV) and clean energy sectors, known for its innovative approach to sustainable transportation and energy solutions. Tesla designs and manufactures electric vehicles, battery energy storage systems, and solar products.
In 2024, Tesla Inc. (NASDAQ:TSLA) reported a 53% drop in net income to $7.091 billion, while revenues remained nearly unchanged at $97.690 billion. The company experienced a 6% decrease in electric vehicle sales, partially due to increased competition and reduced subsidies in key markets. However, Tesla Inc. (NASDAQ:TSLA)’s energy generation and storage segment grew by 67%, reaching $10.086 billion, reflecting the company’s efforts to diversify.
Despite these setbacks, Tesla Inc. (NASDAQ:TSLA) continues to invest in future growth areas, such as autonomous driving technology and more affordable EV models. CEO Elon Musk has announced plans to introduce autonomous vehicles in Austin by June and aims to produce several thousand humanoid robots by the end of 2025. These initiatives are part of Tesla Inc. (NASDAQ:TSLA)’s strategy to sustain its leadership in innovation and expand its market presence.
Morgan Stanley analyst Adam Jonas raised his Tesla price target from $400 to $430, maintaining an Overweight rating and calling it a “top pick.”
1. Taiwan Semiconductor Manufacturing Company Limited. (NYSE:TSM)
Number of Hedge Fund Holders: 158
Taiwan Semiconductor Manufacturing Company Limited. (NYSE:TSM) is the world’s largest contract chipmaker, renowned for its advanced semiconductor technologies.
In the fourth quarter of 2024, Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM) reported net revenue of approximately $26.45 billion, marking a 38.8% year-over-year increase, driven by strong demand for artificial intelligence (AI) and high-performance computing applications. The company also generated a free cash flow of about $7.8 billion in Q4, up from $6.8 billion in Q4 2023. The company expects continued growth in AI-related chip demand, projecting that revenue from AI-related servers and processors will double in 2025.
Despite a recent earthquake in southern Taiwan causing some production disruptions, Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM) expects first-quarter 2025 revenue to be between $25 billion and $25.8 billion, in line with its guidance.
Taiwan Semiconductor Manufacturing Company Limited. (NYSE:TSM)’s strategic importance in the semiconductor industry has attracted significant interest from institutional investors, with approximately 158 hedge funds in Insider Monkey’s Q3 2024 database holding positions in the company. Simon Coles of Barclays recently reiterated a “Buy” rating on the company, raising the price target from $240 to $255, indicating a potential upside of approximately 23.71% from the current price.
Overall Taiwan Semiconductor Manufacturing Company Limited. (NYSE:TSM) ranks first on our list of the 10 Best Manufacturing Stocks To Buy Now. While we acknowledge the potential for Taiwan Semiconductor Manufacturing Company Limited. (NYSE:TSM) as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than Taiwan Semiconductor Manufacturing Company Limited. (NYSE:TSM) but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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