In this article, we take a look at the 5 best manufacturing stocks to invest in. If you want to see our detailed analysis of the growth and returns of these stocks, you can head on to 11 Best Manufacturing Stocks to Invest In.
5. 3M Company (NYSE:MMM)
Number of Hedge Fund Holders: 46
3M Company (NYSE:MMM) develops, manufactures, and markets various products worldwide. It operates through four primary segments: Safety and Industrial, Transportation and Electronics, Health Care, and Consumer. This November, 3M Company (NYSE:MMM) announced its collaboration with Mobileye, a subsidiary of Intel Corporation (NASDAQ:INTC), to make advancements in road safety by delivering a crowdsourced infrastructure asset data to transportation agencies through the 3M Roadway Safety Asset Manager platform.
On October 11th, Langenberg analyst Brian Langenberg upgraded 3M Company (NYSE:MMM) to Buy from Hold and reiterated his price target of $210.
By the end of the third quarter of 2021, Insider Monkey identified 3M Company (NYSE:MMM) to be a part of 46 hedge fund portfolios. The total stakes of these hedge funds in the company were more than $1.62 billion, up from $1.58 billion in the previous quarter with 42 positions.
4. The Boeing Company (NYSE:BA)
Number of Hedge Fund Holders: 50
The Boeing Company (NYSE:BA) designs, develops, manufactures, sells, services, and supports commercial jetliners, military aircraft, satellites, missile defense, human space flight and launch systems, and services worldwide. The company operates through four segments: Commercial Airplanes; Defense, Space & Security; Global Services; and Boeing Capital.
In October, RBC Capital initiated coverage of The Boeing Company (NYSE:BA) and assigned it an Outperform rating with a $275 price target.
Out of the elite 867 hedge funds tracked by Insider Monkey, 50 hedge funds held stakes in The Boeing Company (NYSE:BA) by the end of the third quarter of 2021. The total value of these stakes was $1.43 billion.
According to Insider Monkey’s data, Renaissance Technologies is the key shareholder in The Boeing Company (NYSE:BA) as of September 30th.
3. Lockheed Martin Corporation (NYSE:LMT)
Number of Hedge Fund Holders: 51
Lockheed Martin Corporation (NYSE:LMT) operates as a security and aerospace company that actively engages in the research, design, development, manufacture, integration, and sustainment of technology systems, products, and services worldwide. It operates through four segments: Aeronautics, Missiles and Fire Control, Rotary and Mission Systems, and Space.
On November 5th, Lockheed Martin Corporation (NYSE:LMT) was awarded a $10.86 billion contract for Advanced Raptor Enhancement & Sustainment (ARES), for the F-22 Program Office.
By the end of the third quarter of 2021, Israel Englander of Millennium Management owned more than 561,000 shares of the company, which are worth $193.77 million.
2. Builders FirstSource, Inc. (NYSE:BLDR)
Number of Hedge Fund Holders: 53
Builders FirstSource, Inc. (NYSE:BLDR) manufactures and supplies building materials, manufactured components, and construction services to professional homebuilders, sub-contractors, remodelers, and consumers in the United States. The company operates through four segments: Northeast, Southeast, South, and West. Builders FirstSource, Inc. (NYSE:BLDR) was founded in 1998 and is based in Dallas, Texas.
Builders FirstSource, Inc. (NYSE:BLDR) reported its third-quarter earnings per share to be $3.39, beating expert estimates by $1.76. The company’s revenue grew by 139.98% year over year and was calculated to be $5.51 billion, beating revenue estimates by $683.59 million.
This November, BMO Capital analyst Ketan Mamtora raised his price target on Builders FirstSource, Inc. (NYSE:BLDR) to $76 from $67 and reiterated an Outperform rating on the shares after its third-quarter earnings beat estimates.
Builders FirstSource, Inc. (NYSE:BLDR) was a part of 53 hedge funds’ investment portfolios by the end of the third quarter of 2021. These hedge funds had total stakes worth $2.21 billion in the company.
According to the September filings, Coliseum Capital is the leading shareholder in Builders FirstSource, Inc. (NYSE:BLDR). The fund has stakes worth $460.62 million in the company.
Merion Road Capital Management, an investment management firm, published its third-quarter 2021 investor letter, in which it mentioned Builders FirstSource, Inc. (NYSE:BLDR). Here’s what the experts at Merion Road Capital Management had to say:
“I added to our position in Builder’s FirstSource (“BLDR”) during the quarter. BLDR is the largest national supplier of structural building products and value-added components to the residential construction market. They have been active in consolidating the industry, most notably with the merger of BMC earlier this year. Like other distributors, BLDR benefits from scale advantages that afford them a robust product offering, enhanced purchasing power, and fixed cost leverage. They will continue to acquire smaller competitors and have announced 5 new deals so far this year.
I view the strategic benefit of these acquisitions in three different buckets. There are the core tuck-in acquisitions of facilities and customer lists that increase scale and geographic reach. An example would be the company’s May acquisition of John’s Lumber, a lumber and specialty product distributor serving the Detroit MSA, at 0.5x revenue. There are product acquisitions that leverage their platform to increase distribution and improve the product offering. For instance, last month BLDR announced the acquisition of California TrusFrame, a designer and manufacturer of prefabricated components like trusses and wall panels, at 1.3x revenue. And lastly BLDR has begun investing in software and services. In June they spent $450mm on the purchase of WTS Paradigm, a software company that addresses the complexity around building configuration, estimating, and manufacturing, at 9.0x revenue. By utilizing software to in the planning process, WTS Paradigm cuts down on material and labor waste, ensures an optimal fit of product and design, and eases the contractor’s workload. BLDR has followed this up with a much smaller software acquisition in September.
BLDR is in the very early innings of their software investment, so it is difficult to pinpoint exactly how it will impact the company in the coming years. Management believes that there is a lot of low hanging fruit, pointing to a McKinsey study ranking the construction industry as second to last on overall digitization. If anyone has had any work done to their house, I am sure they can anecdotally attest to this. BLDR plans to leverage WTS Paradigm to increase internal productivity (i.e. improved estimating leading to fewer visits to the job site), cross-sell the software to existing clients, and drive greater adoption of value-added products. So thinking a few years out I think the goal would be to have higher margins on their commodity business, a greater mix of revenue coming from value added products, a stronger relationship with their customer, and an enhanced competitive advantage…”
1. Tesla Inc. (NASDAQ:TSLA)
Number of Hedge Fund Holders: 60
Tesla Inc. (NASDAQ:TSLA) designs, develops, manufactures, leases, and sells electric vehicles, and energy generation and storage systems in the United States, China, and internationally. The company operates in two segments, Automotive, and Energy Generation and Storage. Tesla Inc. (NASDAQ:TSLA) was founded in 2003 and is headquartered in Palo Alto, California.
ARK Investment Management is the largest shareholder in Tesla Inc.’s (NASDAQ:TSLA) stock. As of September 30th, the fund is in possession of over 3.95 million shares of Tesla Inc. (NASDAQ:TSLA), which brings its total stake to $3.06 billion.
On 8th November, Jefferies analyst Philippe Houchois raised his price target on Tesla Inc. (NASDAQ:TSLA) to $1,400 from $950 and reiterated a Buy rating on the shares.
By the end of the third quarter of 2021, 60 hedge funds in Insider Monkey’s database held stakes in Tesla Inc. (NASDAQ:TSLA), worth $10.64 billion. This is compared to 60 hedge funds in the first quarter, which had total stakes worth $9.29 billion in the company.
Here’s what Worm Capital LLC, had to say about Tesla Inc. (NASDAQ:TSLA) in their third-quarter 2021 investor letter:
“Our core portfolio as of this writing—TSLA, SPOT, SHOP, ABNB, and AMZN—are all premier examples of companies that use the concept of aggregation of marginal gains to continuously improve their value proposition for customers. After all, what is innovation if not just a continuous search for fractional advantages in business?
The way we see it, Tesla is perhaps the generational example of the marginal gain aggregation theory. It’s also been our largest position for several years now. There are many ways to characterize and value this business (see previous letters for longform write-ups), but perhaps the best way to think about the company is that it is a highly vertically-integrated software and hardware firm that’s devoted entirely to aggregating marginal gains across its organization. The goal? Lower costs, improve thruputs, and dramatically enhance the value proposition—at scale—for consumers…”
You can also look at 10 Best Stocks Under $10 to Buy Right Now and 11 Best Lithium and Battery Stocks To Buy.
