In this article, we will discuss the 12 best industrial distribution stocks to buy according to hedge funds.

2025: A Year of Tariffs and Uncertainty

A pressing concern looming over the United States currently is the potential impact of tariffs which have affected distributors as they encountered increased costs for imported goods.

While President Trump has already announced tariffs for Canada, Mexico, and China, CNBC reported that several short- to medium-term effects of this move include a slowdown in global economic growth slowing down, especially in nations with large manufacturing sectors, as well as higher prices for American consumers and higher-for-longer U.S. interest rates, and eventually a stronger USD. Among some of the sectors expected to be hit are industrials and manufacturing other than automotive, makers of chips and semiconductor equipment, consumer goods, Chinese e-retailers, and green energy.

Simultaneously, Trump imposed a 25% tariff on all steel and aluminum imports into the country. According to the New York Times, the effect of these tariffs would flow through to the users of metal goods. Items that are expected to get expensive include construction, housing, and appliances as well as cars, canned food, beer, and fizzy drinks. Amidst concerns regarding how these tariffs would deter development and rebuilding and negate the President’s agenda of making national housing affordable, the National Association of Home Builders has requested to exempt building materials from the tariffs.

With that being said, let’s move to the 12 best industrial distribution stocks to buy according to hedge funds.

Our Methodology

In order to compile a list of the 12 best industrial distribution stocks to buy according to hedge funds, we used a stock screener to screen relevant stocks with the highest market caps. Moving on, we shortlisted the top 12 stocks from our list which had the highest number of hedge fund holders. The 12 best industrial distribution stocks to buy according to hedge funds have been arranged in ascending order of their hedge fund holders as of Q3 2024.

At Insider Monkey we are obsessed with 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).

12 Best Industrial Distribution Stocks to Buy According to Hedge Funds

12. SiteOne Landscape Supply, Inc. (NYSE:SITE)

Number of Hedge Fund Holders: 18

SiteOne Landscape Supply, Inc. (NYSE:SITE) serves as the largest and only national wholesale distributor of landscape supplies in the US. The company’s customers include residential and commercial landscape professionals specializing in the design, installation, and maintenance of gardens, golf courses, lawns, and other outdoor spaces.

SiteOne is a clear market leader in wholesale landscape distribution, with over 700 branches and four distribution centers covering 45 US states and six Canadian provinces. The company offers a comprehensive selection of over 100,000 stock keeping units through an extensive North American network. Other than engaging in value-creating acquisitions, the company executes a compelling and sustainable growth strategy by fully exploiting its scale, resources, and capabilities as well as carrying out local market growth strategies. Simultaneously, SiteOne has significant room to grow across product lines.

The firm’s maintenance and new construction markets continue to be resilient. However,  SiteOne Landscape Supply, Inc. (NYSE:SITE) encountered market headwinds with 3% price deflation and a weaker repair and remodel market in the third quarter of 2024, the firm was capable in achieving 2% Organic Daily Sales volume growth partially offsetting the price decline.

11. Fastenal Company (NASDAQ:FAST)

Number of Hedge Fund Holders: 25

Fastenal Company (NASDAQ:FAST) is a distributor of wide-ranging industrial and construction products. The company sells a broader range of industrial and construction supplies spanning over nine major product lines through a global network of in-market locations. Fastenal had 3,628 in-market locations in 25 countries at the end of 2024.

Fastenal is a leader in the wholesale distribution of industrial and construction supplies. The firm stands apart in its ability to support customers with local service, comprehensive technology, and consistent capabilities on a global scale, surpassing small distributors providing local service but limited technology and geographic reach as well as large suppliers with strong e-commerce platforms and national reach but limited local service.

The fourth quarter of 2024 marked a frustrating end to a challenging year for Fastenal, with a daily sales growth of 2.1%. Challenges resulting in the slow rate of growth included a soft manufacturing environment, low seasonal volumes, and many of the firm’s largest customers having sharp production cuts in late December during holiday-related plant shutdowns.