In this article, we discuss 12 best manufacturing stocks to buy now. If you want to skip our detailed analysis of the manufacturing sector, head directly to 5 Best Manufacturing Stocks To Buy Now.
In 2022, the manufacturing industry remained resilient, and while this year also experienced record demand and production levels, the short-term outlook is not rosy. This is due to the unstable macro environment and uncharted inflation rates, which are destroying growth pace in the sector. Complex issues persist in the manufacturing sector, including supply chain bottlenecks, inventory and logistics backlogs, skyrocketing costs, and cybersecurity breaches.
According to Deloitte, there are five crucial trends that will shape the global manufacturing industry in 2023. First, ongoing investments in complex manufacturing technologies will increase productivity and resilience in the manufacturing sector. Second, manufacturers are working hard to address the high workforce turnover and looking to keep their employees onboard with improved talent retention methods. Moreover, manufacturers are alleviating supply chain constraints by shifting to just-in-case inventory strategies and sourcing raw materials locally. Some manufacturers are even creating in-house raw materials to mitigate unforeseen shortages. In addition to that, manufacturers are digitally transforming their plants and factories by making their operations smart or creating a metaverse platform for their products and services. Manufacturers are also working hard to keep their environmental, social, and governance commitments. Another emerging trend in the manufacturing sector is Supply Chain 4.0, which refers to supply chain management that is led by trailblazing technologies such as the Internet of Things (IoT), artificial intelligence (AI), robotics, and big data analytics. This helps revolutionize logistics, supply chains, and production by optimizing costs, increasing efficiency, promoting innovation, and staying ahead of the competition.
Don’t Miss: Top 20 Manufacturing Countries in the World
Jay Timmons, President and CEO of The National Association of Manufacturers, described the manufacturing outlook for this year and commented on January 5, 2023:
“The majority of manufacturers expect a recession this year. Congress failed to act on essential tax reforms, which complicates investment, increases inflationary pressures and could stifle economic growth. Much needed permitting reforms and provisions to strengthen our ability to conduct research and development, buy machinery and finance job-creating investments — which we need to promote growth within the sector — were left on the cutting room floor last year. Those reforms, combined with manufacturers’ ongoing efforts to inspire, educate and empower the future workforce, are critical to our competitiveness.”
According to Tesla, Inc. (NASDAQ:TSLA)’s Elon Musk, while it is great how many entrepreneurs are entering the tech and software industry, he believes the heavy industry presents significant opportunities. Musk recently stated that there is a scarcity of skilled workforce in the manufacturing and heavy industries. In this article, we discuss some of the best manufacturing stocks to buy now, including Deere & Company (NYSE:DE), Honeywell International Inc. (NASDAQ:HON), and Caterpillar Inc. (NYSE:CAT). Investors can also check out 20 Largest Manufacturing Companies in the World and Top Manufacturing Companies in the US.
Our Methodology
We selected the following manufacturing 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.
Photo by Carl Nenzen Loven on Unsplash
Best Manufacturing Stocks To Buy Now
12. Illinois Tool Works Inc. (NYSE:ITW)
Number of Hedge Fund Holders: 32
Illinois Tool Works Inc. (NYSE:ITW) manufactures and distributes industrial products and equipment worldwide, operating through Automotive OEM, Food Equipment, Test & Measurement and Electronics, Welding, Polymers & Fluids, Construction Products, and Specialty Products segments. On May 12, Illinois Tool Works Inc. (NYSE:ITW) declared a $1.31 per share quarterly dividend, in line with previous. The dividend is payable on July 13, to shareholders of record on June 30.
According to Insider Monkey’s first quarter database, 32 hedge funds were bullish on Illinois Tool Works Inc. (NYSE:ITW), compared to 34 funds in the earlier quarter. Paul Marshall and Ian Wace’s Marshall Wace LLP is the largest stakeholder of the company, with 367,963 shares worth $89.5 million.
In addition to Deere & Company (NYSE:DE), Honeywell International Inc. (NASDAQ:HON), and Caterpillar Inc. (NYSE:CAT), Illinois Tool Works Inc. (NYSE:ITW) is one of the best manufacturing stocks to watch.
11. AMETEK, Inc. (NYSE:AME)
Number of Hedge Fund Holders: 36
AMETEK, Inc. (NYSE:AME) manufactures and sells electronic instruments and electromechanical devices. It is one of the best manufacturing stocks to invest in. On May 25, AMETEK, Inc. (NYSE:AME) declared a $0.25 per share quarterly dividend, in line with previous. The dividend is payable on June 30, to shareholders of record on June 12.
On May 2, AMETEK, Inc. (NYSE:AME) reported a Q1 non-GAAP EPS of $1.49 and a revenue of $1.59 billion, outperforming Wall Street estimates by $0.08 and $50 million, respectively.
According to Insider Monkey’s first quarter database, 36 hedge funds were bullish on AMETEK, Inc. (NYSE:AME), compared to 39 funds in the preceding quarter. Dmitry Balyasny’s Balyasny Asset Management is the largest position holder in the company, with over 1 million shares worth $148.15 million.
Aristotle Core Equity Strategy made the following comment about AMETEK, Inc. (NYSE:AME) in its Q4 2022 investor letter:
“AMETEK, Inc. (NYSE:AME) contributed to performance in the fourth quarter following a better-than-expected third quarter earnings report and an increase in full year guidance. The company has low balance sheet leverage and management appeared confident in its ability to source acquisitions. Management believes that the company’s recession risk is lower than in previous economic cycles due to the remixing of the portfolio to less cyclical end markets.”
10. Xylem Inc. (NYSE:XYL)
Number of Hedge Fund Holders: 37
Xylem Inc. (NYSE:XYL) designs, manufactures, and services engineered products and solutions for water and wastewater applications worldwide. It is one of the best manufacturing stocks to invest in. On May 18, Xylem Inc. (NYSE:XYL) declared a $0.33 per share quarterly dividend, in line with previous. The dividend is payable on June 28, to shareholders of record on May 30.
According to Insider Monkey’s first quarter database, 37 hedge funds were bullish on Xylem Inc. (NYSE:XYL), up from 21 funds in the prior quarter. Ian Simm’s Impax Asset Management is the biggest stakeholder of the company, with 1.20 million shares worth $126.5 million.
Conestoga Mid Cap Strategy made the following comment about Xylem Inc. (NYSE:XYL) in its Q1 2023 investor letter:
“Xylem Inc. (NYSE:XYL): XYL is a leading global water technology company. The company designs, manufactures, and services highly engineered solutions sold into the Water Utility sector, Industrial market, and Commercial market. Although XYL reported a very strong Q4 with organic growth up 20%, they also announced a very large acquisition of Evoqua Water Technologies (AQUA), which Conestoga owns in the small cap strategy. The street is concerned that XYL is paying too much for AQUA and, therefore, the stock corrected.”
9. Cummins Inc. (NYSE:CMI)
Number of Hedge Fund Holders: 38
Cummins Inc. (NYSE:CMI) was founded in 1919 and is headquartered in Columbus, Indiana. The company designs, manufactures, and services diesel and natural gas engines, electric and hybrid powertrains, and related components worldwide. On May 2, Cummins Inc. (NYSE:CMI) reported a Q1 GAAP EPS of $5.55 and a revenue of $8.45 billion, outperforming Wall Street estimates by $0.77 and $320 million, respectively. The company also distributed a $1.57 per share quarterly dividend on June 1.
According to Insider Monkey’s first quarter database, 38 hedge funds were bullish on Cummins Inc. (NYSE:CMI), compared to 33 funds in the earlier quarter. Jean-Marie Eveillard’s First Eagle Investment Management is the largest stakeholder of the company, with 2.05 million shares worth $491.4 million.
8. Johnson Controls International plc (NYSE:JCI)
Number of Hedge Fund Holders: 41
Johnson Controls International plc (NYSE:JCI) specializes in engineering, manufacturing, commissioning, and retrofitting building products and systems, operating through Building Solutions North America, Building Solutions EMEA/LA, Building Solutions Asia Pacific, and Global Products segments. On June 7, Johnson Controls International plc (NYSE:JCI) declared a $0.37 per share quarterly dividend, a 2.8% increase from the prior dividend of $0.36. The dividend is payable on July 14, to shareholders of record on June 20.
According to Insider Monkey’s first quarter database, 41 hedge funds were long Johnson Controls International plc (NYSE:JCI), compared to 45 funds in the prior quarter. Phill Gross and Robert Atchinson’s Adage Capital Management is the largest stakeholder of the company, with 4.4 million shares worth $264.4 million.
ClearBridge Aggressive Growth Strategy made the following comment about Johnson Controls International plc (NYSE:JCI) in its Q4 2022 investor letter:
“On an individual stock basis, positions in Broadcom, Comcast, Johnson Controls International plc (NYSE:JCI), Madison Square Garden Sports and Twitter were the leading contributors to absolute returns during the period. HVAC and building services provider Johnson Controls, meanwhile, saw a normalization of supply chain and semiconductor shortages lead to better operating results and subsequent strong performance.”
7. Emerson Electric Co. (NYSE:EMR)
Number of Hedge Fund Holders: 47
Emerson Electric Co. (NYSE:EMR) manufactures and distributes process control systems, climate technologies, power technologies, electric motors, storage systems, and professional tools for industrial, commercial, and consumer markets. On May 3, Emerson Electric Co. (NYSE:EMR) reported a Q2 non-GAAP EPS of $1.09 and a revenue of $3.76 billion, outperforming Wall Street estimates by $0.10 and $110 million, respectively.
According to Insider Monkey’s first quarter database, 47 hedge funds were bullish on Emerson Electric Co. (NYSE:EMR), compared to 32 funds in the prior quarter. Ken Griffin’s Citadel Investment Group is the largest stakeholder of the company, with 4.26 million shares worth $371.3 million.
6. Parker-Hannifin Corporation (NYSE:PH)
Number of Hedge Fund Holders: 49
Parker-Hannifin Corporation (NYSE:PH) manufactures and commercializes motion and control technologies and systems for mobile, industrial, and aerospace sectors globally. On May 4, Parker-Hannifin Corporation (NYSE:PH) reported a Q1 non-GAAP EPS of $5.93 and a revenue of $5.06 billion, topping Wall Street estimates by $0.92 and $270 million, respectively. Revenue for the period increased 23.7% on a year-over-year basis.
According to Insider Monkey’s first quarter database, 49 hedge funds were bullish on Parker-Hannifin Corporation (NYSE:PH), compared to 47 funds in the last quarter. Harris Associates is the largest stakeholder of the company, with 2.65 million shares worth $892.4 million.
Like Deere & Company (NYSE:DE), Honeywell International Inc. (NASDAQ:HON), and Caterpillar Inc. (NYSE:CAT), smart investors are piling into Parker-Hannifin Corporation (NYSE:PH) for exposure to the manufacturing sector.
Here is what Stewart Asset Management has to say about Parker-Hannifin Corporation (NYSE:PH) in its Q3 2022 investor letter:
“We also need to point out one global consequence of the rapid rise in interest rates: an irrepressibly strong dollar. This hurts the reported earnings of U.S. companies who sell their goods and services overseas. Foreign currency earnings translate into fewer dollars and thus lower earnings. Most of the companies in your portfolios gain a notable amount of earnings from their international operations. While the strength or weakness of a currency doesn’t change the quality of a business or its longer-term earnings power, it can change the reported earnings of a company over short periods of time. It is difficult to forecast this effect accurately because many of our companies manufacture where they sell, which to some extent dulls the sharp negative effect of a surging dollar. Others sell goods that are priced in dollars such as Parker-Hannifin’s (NYSE:PH) aerospace products.”
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Disclosure: None. 12 Best Manufacturing Stocks To Buy Now is originally published on Insider Monkey.