11 Best Materials Stocks to Buy According to Hedge Funds

7. Ecolab Inc. (NYSE:ECL)

Number of Hedge Fund Holders: 59

Ecolab Inc. (NYSE:ECL) is included in the list of the best materials stocks. It manufactures and distributes cleaning and sanitation solutions for the life sciences, healthcare, hospitality, and industrial manufacturing markets. Being the industry leader in cleaning and sanitation, the firm offers products that assist its clients in the hospitality, food service, and life sciences sectors with laundry, dishwashing, maintaining hygienic manufacturing facilities, and guaranteeing regulatory compliance. The company has a strong razor-and-blade business model and unparalleled scale, which provides it a distinct competitive edge. The scale of its sanitation and cleaning surpasses that of its competitors. The business makes more than twice as much money as its largest competitor. Many of its markets are composed of local and regional competitors, and its industries are fragmented. About 9% of the $152 billion global market is controlled by the firm. The business attracts international manufacturing, food service, and hospitality companies as partners.

Ecolab Inc. (NYSE:ECL) reported $4 billion in revenue for the fourth quarter of 2024, which is a growth of around 2% year over year. Stronger growth in its Industrial and Healthcare & Life Sciences segments, along with ongoing strong performance in its Pest Elimination and Institutional & Specialty divisions, were the main drivers of the 4% surge in organic sales. Although overseas markets also reported favorable results, the impact of differing macroeconomic conditions was somewhat mitigated by new business gains. The United States led the region in terms of organic sales growth. The operational income margin of the business was 14.6%.

The company’s operating cash flow of $2.8 billion and free cash flow of $1.8 billion in FY24 demonstrated a strong financial position. For 33 years in a row, Ecolab Inc. (NYSE:ECL) was able to raise dividends due to its strong cash flow.