Below we present the list of the 5 industrial stocks that are ‘must buys’ according to Caxton Associates. For our methodology and a more comprehensive list of stocks that Caxton Associates is bullish on, please see 10 Industrial Stocks That Are Must Buys According to Caxton Associates.
5. Gibraltar Industries Inc. (NASDAQ:ROCK)
Value of Caxton Associates’ 13F Position: $1.41 million
Number of Hedge Fund Shareholders: 18
Bruce Kovner’s Caxton Associates added a new position in Gibraltar Industries Inc (NASDAQ:ROCK) to its 13F portfolio during Q1, buying 32,703 shares. Hedge fund ownership of ROCK has rebounded by 64% since hitting a three-year low in the third quarter of 2021.
Gibraltar Industries Inc (NASDAQ:ROCK) operates across several segments, all of which experienced some positive momentum in Q1. The company’s order backlog grew by 23% during the quarter to $433 million, with its renewables and agtech segments powering that growth. Gibraltar’s residential segment also had strong bookings and margin performance. The company’s infrastructure segment experienced strong growth as well, though labor inefficiency and inflation impacted margins.
Gibraltar Industries Inc (NASDAQ:ROCK) grew adjusted revenue by 12% during the first quarter to $316 million, while its adjusted operating income was 17% higher at $27 million. Adjusted EPS was up by 11% to $0.60. For the full year, Gibraltar expects EPS of between $3.20 and $3.40 and revenue of $1.38 billion to $1.43 billion.
4. The Toro Company (NYSE:TTC)
Value of Caxton Associates’ 13F Position: $1.46 million
Number of Hedge Fund Shareholders: 24
Caxton Associates was bucking the hedge fund trend when it came to The Toro Company (NYSE:TTC) in Q1, nearly doubling the size of its long position to 17,066 shares. Hedge fund ownership of Toro has declined for four straight quarters since peaking in the first quarter of 2021, falling by 31% during that period. John Overdeck and David Siegel’s Two Sigma Advisors was one of the funds to sell off its TTC stake during Q1.
The Toro Company (NYSE:TTC) grew year-over-year net sales by 8.7% to $1.25 billion in the company’s fiscal second quarter ended April 29. The landscaping equipment company’s professional segment was the strongest performer, growing net sales by 11.8% to $925.8 million. Increased costs weighed heavily on margins however, as gross margin fell by 270 basis points to 32.4%.
The Toro Company (NYSE:TTC) recently launched a robotic, autonomous mower that boasts an industry-first vision-based system. The wire-free system will become available to consumers next spring. Robotic mower sales are expected to grow significantly over the next decade as they become more efficient and affordable. The company also recently unveiled an autonomous fairway mower.
3. 3M Company (NYSE:MMM)
Value of Caxton Associates’ 13F Position: $1.91 million
Number of Hedge Fund Shareholders: 51
One of 15 Important Stocks That are Losing Value in 2022, 3M Company (NYSE:MMM) shares have slumped by 27% year-to-date. That weakness prompted Caxton Associates to take a long position in the industrial and consumer goods company, buying 12,858 shares during Q1. Several other hedge funds did the same, as there was a 21% jump in the number of funds long MMM during the quarter.
Income investors should certainly be intrigued by 3M Company (NYSE:MMM)’s dividend, which is now yielding 4.6%, well above its historical highs. While the diversified industrial giant is facing some of the same supply chain and pricing challenges that many other companies are also facing, demand for its products remains strong.
Given the breadth of its overseas operations, forex fluctuations are heavily impacting 3M Company (NYSE:MMM), with CEO Mike Roman predicting a 3%-4% impact while speaking at the Bernstein Strategic Decisions Conference. The CEO further predicted a $300 million revenue impact from the lockdowns in China, which would be equivalent to nearly 1% of the company’s 2021 sales, as well as up to $50 million in raw materials inflation above and beyond what the company was modeling for.
2. General Electric Company (NYSE:GE)
Value of Caxton Associates’ 13F Position: $5.15 million
Number of Hedge Fund Shareholders: 53
Caxton Associates raised its position in General Electric Company (NYSE:GE) by 19% during Q1, lifting it to 56,280 shares. The fund also has a larger put position in the stock. Hedge fund ownership of GE is down by 27% over the past year, as numerous funds that bought into the stock when it hit decades-long lows in 2020 quickly sold it off again upon its subsequent gains. Shares of GE are nonetheless still down by 70% over the last five years.
General Electric Company (NYSE:GE) is facing supply chain pressure across several of its segments, including renewables, aviation, and healthcare. Healthcare was significantly affected, with the segment’s quarterly growth coming in at just 1%, which management claimed could have been 9% without the supply chain woes.
Those broad challenges prompted General Electric Company (NYSE:GE) to warn investors during its Q1 conference call that its results were trending towards the low end of its 2022 guidance. On the positive side, GE does have a growing, $240 billion backlogs that should eventually come home to roost on its balance sheet once it can iron out its supply chain issues.
1. Aptiv PLC (NYSE:APTV)
Value of Caxton Associates’ 13F Position: $155 million
Number of Hedge Fund Shareholders: 50
Easily topping the list of Caxton Associates’ industrial stock must-buys is Aptiv PLC (NYSE:APTV), which ranks the fund’s second-largest long position overall. While many of the aforementioned industrial holdings are far more modest in nature, the fund has a huge bet on the electric car technology company, owning 1.29 million shares worth close to $155 million. That investment gives its 13F portfolio 12.59% exposure to the stock.
Aptiv PLC (NYSE:APTV) shares have pulled back significantly this year, falling by 45% even as the company released FY22 guidance than some analysts believe was overly aggressive. Aptiv’s adjusted EPS guidance of between $3.90 and $4.80 was particularly bullish compared to analysts, who are projecting just $3.88. The company has also received mixed reviews for its January acquisition of software firm Wind River for $4.3 billion in cash, which has also weighed on shares.
The ClearBridge Investments Sustainability Leaders Strategy is also a big fan of Aptiv PLC (NYSE:APTV)’s growth potential given its exposure to electric vehicles, having this to say about the company in its Q1 2022 investor letter:
“The acceleration in electrification of transport should support electric vehicle (EV)-related stocks like Aptiv (NYSE:APTV), which came under pressure in the quarter on concerns the auto cycle is past its peak. Aptiv provides a range of solutions for the auto industry, including autonomous driving technologies, safety technologies, components, and wiring. The large exposure of APTV to EVs should lead to long-term value as EVs continue their growth, boosted by their relative attractiveness as prices at the pump hit near-historic highs.”
For more on the latest trades made by some of the biggest hedge fund managers in the world, check out 10 Best Tech Stocks to Buy According to Billionaire Ken Griffin and Cliff Asness’ Short Position on AMC and His Top 10 Picks.
