10 Best Materials Stocks to Buy According to Hedge Funds

7. Avantor, Inc. (NYSE:AVTR)

Number of Hedge Fund Investors  in Q1 2024: 55

Avantor, Inc. (NYSE:AVTR) is one of the more interesting basic materials companies since it serves the needs of the pharmaceutical industry. This somewhat insulates it against broader, business cycle led economic headwinds and provides it with the potential to benefit in case medicines or treatments that use its products take off in the market. Avantor, Inc. (NYSE:AVTR) is a key player in creating active pharmaceutical ingredients for making pills – a business that could take off if the world decides to shift to weight loss pills instead of the injections that are currently popular. Avantor, Inc. (NYSE:AVTR) also commands a sizeable market share, which is evident through its trailing twelve month revenue of $12.8 billion. This insulates the firm against economic shocks, as while the demand for pharmaceutical basic materials might slow down, the non cyclical nature of the industry leaves it less vulnerable when compared to other basic materials stocks. Additionally, Avantor, Inc. (NYSE:AVTR) is also offering products in the highly competitive genetic engineering industry, which could help it grow should more treatments like a recent sickle cell drug take off.

Avantor, Inc. (NYSE:AVTR) shared key details for its gene therapy products during its Q1 2024 earnings call where it outlined:

In Bioscience Production, the bioprocessing end market remains healthy with a robust pipeline of new therapies, a favorable regulatory landscape, including three new cell and gene therapy approvals in the quarter and strong patient demand. Importantly, we saw another quarter of sequential improvement in our bioprocessing order rate. Within healthcare, medical implant procedure rates continue to be positive, and overall demand within the semiconductor end market has rebounded from the lows we experienced in 2023. Consistent with our in-line revenue performance in the quarter, these encouraging market signals have not yet translated into an inflection in aggregate sales levels as pockets of inventory destocking and cautious customer spending, notably in equipment and instrumentation, continue to impact demand.