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10 Best Rubber and Plastics Stocks To Buy

In this article, we discuss 10 best rubber and plastics stocks to buy. If you want to skip our detailed discussion on the rubber and plastics industry, head directly to 5 Best Rubber and Plastics Stocks To Buy

In 2022, the worldwide market demand for natural rubber was valued at $30.61 billion. Expert Market Research expects it to increase at a compound annual growth rate (CAGR) of 3.5% during the forecast period from 2023 to 2028. By 2028, it is estimated that the market value for natural rubber will reach approximately $37.63 billion. The Asia Pacific region is the dominant leader in the natural rubber industry, with Thailand, Indonesia, and Malaysia being primary suppliers. Additionally, Vietnam is emerging as a notable sourcing location and has the potential to become a major rubber producer in the near future. The demand for natural rubber in the Asia Pacific is mainly driven by the growing automobile industry and the rising need for latex products such as condoms, belts, gloves, and more. Thailand is the leading supplier for the global natural rubber market, holding a 37% market share.

The global rubber market experienced a significant decline in demand in 2022 due to ongoing disruptions in the supply chain. As 2023 progresses, experts expect that the rubber industry will witness notable recovery in terms of market performance. However, the abandonment of China’s zero-Covid policy and the ongoing conflict between Russia and Ukraine are two major global phenomena that greatly influence the future demand for rubber worldwide. In line with market recovery, rubber and plastics companies are making big moves. For example, Pirelli, a multinational tire manufacturer from Italy, recently entered into an agreement to acquire 100% ownership of Hevea-Tec, the largest independent processor of natural rubber in Brazil. The deal, valued at approximately 21 million euros ($22.9 million), is expected to be finalized by the end of 2023, pending approval from antitrust authorities. This acquisition will enhance Pirelli’s access to natural rubber in Latin America, ensuring a consistent supply in the region and increasing overall efficiency. Pirelli also stated that the purchase of Hevea-Tec will enable them to strengthen their control over the natural rubber supply chain, leading to a reduction in CO2 emissions through local sourcing.

Don’t Miss: 15 Largest Plastic Manufacturing Companies in the World

Similarly, in the beginning of June, Exxon Mobil Corporation (NYSE:XOM) announced that it is initiating a multi-billion dollar petrochemical facility in China. This is the oil and gas giant’s new growth strategy, despite the mounting US-China tensions. According to S&P Global, this facility is the largest among several other new projects in China that are being developed by different companies to produce ethylene, which is a key component in the production of plastic. By means of this new facility in China, Exxon Mobil Corporation (NYSE:XOM) will gain a significant share in the top emerging market for petrochemicals. This market supplies the plastics, resins, and fibers that are utilized by China’s manufacturing sector to produce common consumer goods found in households worldwide. Exxon Mobil Corporation (NYSE:XOM) is highly motivated to move forward with its investment since it forecasts that the demand for petrochemicals will continue to grow significantly beyond the demand for oil, which is expected to remain comparatively stable until 2050. Petrochemicals such as ethylene and polypropylene, which serve as the base components for manufacturing plastic bottles, food packaging, and medical instruments, are more difficult to replace with low-carbon substitutes. Exxon expects a 42% global increase in chemical demand from 2017 to 2030, compared to a mere 5% increase in gasoline demand.

Given these promising market developments, investors have the opportunity to cash in on the growth potential of the rubber and plastics industry by buying stocks like Carlisle Companies Incorporated (NYSE:CSL), Dow Inc. (NYSE:DOW), and LyondellBasell Industries N.V. (NYSE:LYB).

Our Methodology 

We selected the following rubber and plastics stocks based on the hedge fund sentiment toward each stock. We have assessed the hedge fund sentiment from Insider Monkey’s database of 943 elite hedge funds tracked as of the end of the first quarter of 2023. The list is arranged in ascending order of the number of hedge fund holders in each firm. 

Best Rubber and Plastics Stocks to Buy

10. Myers Industries, Inc. (NYSE:MYE)

Number of Hedge Fund Holders: 12

Myers Industries, Inc. (NYSE:MYE) is involved in the distribution of tire service supplies. The company has two main divisions – The Material Handling and Distribution. The Material Handling segment provides various products such as pallets, small parts bins, bulk shipping containers, original equipment manufacturer (OEM) parts, storage and organization solutions, and customized plastic products. On June 5, Myers Industries, Inc. (NYSE:MYE) declared a $0.135 per share quarterly dividend, in line with previous. The dividend was paid to shareholders on July 5. 

According to Insider Monkey’s first quarter database, 12 hedge funds were bullish on Myers Industries, Inc. (NYSE:MYE), compared to 14 funds in the prior quarter. Mario Gabelli’s GAMCO Investors is the largest position holder in the company, with 3.12 million shares worth $67 million. 

Like Carlisle Companies Incorporated (NYSE:CSL), Dow Inc. (NYSE:DOW), and LyondellBasell Industries N.V. (NYSE:LYB), Myers Industries, Inc. (NYSE:MYE) is one of the best rubber and plastics stocks to invest in. 

9. Trinseo PLC (NYSE:TSE)

Number of Hedge Fund Holders: 12

Trinseo PLC (NYSE:TSE) provides specialty material solutions worldwide. The company operates in six segments – Engineered Materials, Latex Binders, Base Plastics, Polystyrene, Feedstocks, and Americas Styrenics. It is one of the best rubber and plastics stocks to invest in. Trinseo PLC (NYSE:TSE) has set notable targets for sustainability by 2030, which include a 35% decrease in greenhouse gas emissions and the achievement of 75% landfill-free operations. 

According to Insider Monkey’s first quarter database, 12 hedge funds held stakes worth $25.7 million in Trinseo PLC (NYSE:TSE), compared to 15 funds in the prior quarter holding stakes worth $53.7 million. 

8. Silgan Holdings Inc. (NYSE:SLGN)

Number of Hedge Fund Holders: 18

Silgan Holdings Inc. (NYSE:SLGN) develops and sells rigid packaging solutions for consumer products in the United States and internationally. The company offers a range of metal and plastic closures, stock plastic containers, plastic thermoformed barrier and non-barrier bowls, and plastic closures for food, household, and personal care products. It is one of the best rubber and plastics stocks to watch. On May 2, Silgan Holdings Inc. (NYSE:SLGN) declared a $0.18 per share quarterly dividend, in line with previous. The dividend was paid to shareholders on June 15. 

According to Insider Monkey’s first quarter database, 18 hedge funds were bullish on Silgan Holdings Inc. (NYSE:SLGN), compared to 13 funds in the prior quarter. Amy Minella’s Cardinal Capital is the biggest stakeholder of the company, with 3.05 million shares worth $164 million.  

Here is what Upslope Capital has to say about Silgan Holdings Inc. (NASDAQ:SLGN) in its Q1 2022 investor letter:

“Silgan is a one-foot hurdle. The company grows modestly and consistently – largely through M&A – and the stock is obviously cheap (12x EPS, 9% FCF yield) on an absolute and relative basis. Shares should perform well in a variety of the most likely environments and represent an opportunity to own a stock that is at once defensive/non-cyclical and cheap. The company has three segments: Metal Containers (food cans, which is what SLGN is most known for and proactively shifted away from in recent years; 40%+ of operating income), Dispensing & Specialty Closures (plastic/metal caps and dispensing systems/sprayers; 40%+ of operating income), and Plastic Containers (15% of operating income). In 2020, SLGN acquired Albéa’s dispensing business (a key competitor of Aptar’s – one of Upslope’s long standing Core longs).

While very much a traditional value stock (i.e. not exactly “quality”), I could foresee owning shares longer- term as SLGN has quietly positioned itself in recent years as a PE-style packaging platform that happens to be publicly traded. Management has historically been disciplined capital allocators, pivoting away from the slowly-melting-ice-cube that is food cans (now < 50% of revenue)…” (Click here to see the full text)

7. The Goodyear Tire & Rubber Company (NASDAQ:GT)

Number of Hedge Fund Holders: 27

The Goodyear Tire & Rubber Company (NASDAQ:GT) manufactures and distributes tires worldwide. It also designs and sells tread rubber and other tire retreading materials. The Goodyear Tire & Rubber Company (NASDAQ:GT) is one of the best rubber stocks to invest in. On May 11, the stock climbed 21% after renowned activist investor Elliott Investment Management disclosed its ownership in the company and revealed that it will pursue five board seats. Elliott, with a 10% economic interest in the company, also expressed a desire for Goodyear to consider selling its company-owned store network or at least monetize it more efficiently. 

According to Insider Monkey’s first quarter database, 27 hedge funds were bullish on The Goodyear Tire & Rubber Company (NASDAQ:GT), compared to 25 funds in the prior quarter. Cliff Asness’ AQR Capital Management is the biggest stakeholder of the company, with 3.65 million shares worth $39.5 million. 

Here is what ClearBridge Small Cap Value Strategy has to say about The Goodyear Tire & Rubber Company (NASDAQ:GT) in its Q3 2022 investor letter:

“We exited a number of stocks during the period, including Goodyear Tire & Rubber (NASDAQ:GT). We sold our position in Goodyear due to the cavalcade of concerns including the company’s elevated debt levels, inflationary pressures from higher input prices, continued manufacturing challenges in the auto industry and complications with the company’s manufacturing volume. With substantial exposure to the automotive industry through other portfolio holdings, we elected to consolidate our exposure within those higher-conviction holdings.”

6. Eastman Chemical Company (NYSE:EMN)

Number of Hedge Fund Holders: 28

Eastman Chemical Company (NYSE:EMN) is a Tennessee-based specialty materials company that offers hydrocarbon resins, organic acid-based solutions, anti-degradant rubber additives, specialty and commodity solvents, paint additives, and performance resins, among others. On May 4, Eastman Chemical Company (NYSE:EMN) declared a quarterly dividend of $0.79 per share, in line with previous. The dividend is payable on July 7, to shareholders of record as of June 15. 

According to Insider Monkey’s first quarter database, 28 hedge funds were long Eastman Chemical Company (NYSE:EMN), compared to 32 funds in the earlier quarter. Dmitry Balyasny’s Balyasny Asset Management is the largest stakeholder of the company, with 781,469 shares worth $66 million. 

In addition to Carlisle Companies Incorporated (NYSE:CSL), Dow Inc. (NYSE:DOW), and LyondellBasell Industries N.V. (NYSE:LYB), smart investors are piling into Eastman Chemical Company (NYSE:EMN) for exposure to the rubber and plastics industry.

Click to continue reading and see 5 Best Rubber and Plastics Stocks To Buy

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Disclosure: None. 10 Best Rubber and Plastics Stocks To Buy is originally published on Insider Monkey.

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