In this article, we will look at the 5 manufacturing stocks at risk as consumer spending and orders decline. If you want to find similar stocks that are vulnerable to a decline in consumer spending, you can read 10 Manufacturing Stocks at Risk as Consumer Spending, Orders Decline.
5. The Boeing Company (NYSE:BA)
Number of Hedge Fund Holders: 51
On August 9, The Boeing Company (NYSE:BA) reported that its aircraft deliveries tumbled to a five-month low of 26 in July. This is the company’s biggest monthly decline since December 2020. The Boeing Company (NYSE:BA) delivered 23 737 MAX jets and three wide-body freighters in July, bringing its total deliveries to 242. As consumer spending on air travel declines, The Boeing Company (NYSE:BA) is vulnerable to order cancellations from airlines. The company reported 4 cancellations in July.
On July 28, JPMorgan analyst Seth Seifman revised his price target on The Boeing Company (NYSE:BA) to $200 from $188 and maintained an Overweight rating on the shares.
As of August 19, The Boeing Company (NYSE:BA) has lost more than 20% of its value year to date.
At the end of Q2 2022, 51 hedge funds held stakes in The Boeing Company (NYSE:BA) worth $1.49 billion. This is compared to 52 positions in the previous quarter with stakes worth $1.36 billion. The hedge fund sentiment for the stock is negative.
4. Builders FirstSource, Inc. (NASDAQ:BLDR)
Number of Hedge Fund Holders: 53
Builders FirstSource, Inc. (NASDAQ:BLDR) manufactures and supplies building materials, manufactured components, and construction services to professional homebuilders, sub-contractors, remodelers, and consumers in the United States. As mortgage rates rise and housing demand slows down, Builders FirstSource, Inc. (NASDAQ:BLDR) is at risk of slowing orders from homebuyers and homebuilders. Shares of Builders FirstSource, Inc. (NASDAQ:BLDR) have fallen more than 20% year to date, as of August 19.
Wall Street is bearish on Builders FirstSource, Inc. (NASDAQ:BLDR). On August 2, RBC Capital analyst Mike Dahl downgraded Builders FirstSource, Inc. (NASDAQ:BLDR) to Sector Perform from Outperform and revised his price target to $79 from $70. The analyst likes the company’s long-term growth projections but sees growing housing headwinds impacting the stock’s earnings in the coming quarters. This August, BTIG analyst Ryan Gilbert downgraded Builders FirstSource, Inc. (NASDAQ:BLDR) to Neutral from Buy.
At the close of Q2 2022, 53 hedge funds held stakes in Builders FirstSource, Inc. (NASDAQ:BLDR) worth $1.38 billion. This is compared to 57 positions in the previous quarter with stakes worth $1.87 billion.
As of June 30, Coliseum Capital owns roughly 6.46 million shares of Builders FirstSource, Inc. (NASDAQ:BLDR) and is the largest shareholder in the company. The investment covers 30.66% of Coliseum Capital’s investment portfolio.
Here is what Black Bear Value Partners had to say about Builders FirstSource, Inc. (NASDAQ:BLDR) in its second-quarter 2022 investor letter:
“Builders FirstSource is a supplier and manufacturer of building materials for professional homebuilders, subcontractors, remodelers, and consumers. Their products include factory-built roof and floor trusses, wall panels and stairs, vinyl windows and custom millwork.
The fundamental discussion about homebuilders applies to BLDR. As more homes are built across the country, there will be an increased need for scaled sourcing of products to homebuilders. There is a large amount of fragmentation in the supply chain which provides BLDR a long runway for acquisitions and realistic synergies.
BLDR should be able to generate $7-$10 a share in cash in the medium term with significant upside if they can scale through acquisition and/or further penetrate existing markets. We own it at a 13-19% free-cash flow yield so little growth is needed for us to compound value at high rates.”
3. Micron Technology, Inc. (NASDAQ:MU)
Number of Hedge Fund Holders: 69
On August 9, Micron Technology, Inc. (NASDAQ:MU) reported that demand for its DRAM and NAND has declined since its earnings call on June 30, 2022. The company expects a challenging market environment in the second half of 2022 and into 2023 and said that it now expects its fiscal fourth quarter 2022 revenue to come below the low end of its guidance range, which as of June 30, sits at between $6.8 billion and $7.23 billion.
Reuters reported that Micron Technology, Inc. (NASDAQ:MU) announced a $40 billion investment in memory chip manufacturing in the United States, but also warned of decreased capital expenditure in fiscal 2023 from 2022. According to Gartner, global PC shipments are expected to fall by 9.5% in 2022. As demand for electronic devices weakens, Micron Technology, Inc. (NASDAQ:MU) runs the risk of experiencing losses as consumer spending and orders decline.
Wall Street has turned bearish on Micron Technology, Inc. (NASDAQ:MU). On August 9, Raymond James analyst Melissa Fairbanks downgraded Micron Technology, Inc. (NASDAQ:MU) to Outperform from Strong Buy and slashed her price target to $65 from $72. This August, Piper Sandler analyst Harsh Kumar reiterated his $50 price target and Underweight rating on Micron Technology, Inc. (NASDAQ:MU).
At the end of Q2 2022, 69 hedge funds were long Micron Technology, Inc. (NASDAQ:MU) and held stakes worth $2.16 billion. This is compared to 78 hedge funds in Q1 2022, with stakes worth $3.42 billion. The hedge fund sentiment for the stock is negative.
As of June 30, Matrix Capital Management owns 4 million shares of Micron Technology, Inc. (NASDAQ:MU) and is the leading shareholder in the company. The investment covers 5.01% of Matrix Capital Management’s 13F portfolio.
Like Tesla, Inc. (NASDAQ:TSLA), NVIDIA Corporation (NASDAQ:NVDA), and General Motors Company (NYSE:GM), Micron Technology, Inc. (NASDAQ:MU) is taking a beating in 2022 and, as of August 19, has lost 36.80% year to date.
2. QUALCOMM, Incorporated (NASDAQ:QCOM)
Number of Hedge Fund Holders: 71
On July 27, QUALCOMM Incorporated (NASDAQ:QCOM) slashed its guidance for the fiscal fourth quarter of 2022. The company expects adjusted earnings for fiscal Q4 of 2022 to range between $3 and $3.30 per share, and revenue to range between $11 billion and $11.8 billion. Wall Street was expecting the chipmaking giant’s earnings for the fiscal fourth quarter of 2022 to come in at $3.26 per share with a revenue of $11.92 billion. Smartphones are a major revenue driver for QUALCOMM Incorporated (NASDAQ:QCOM), and the company noted that inflation is eating away at the purchasing power of consumers. The company expects global smartphone shipments to decline by 5% in 2022.
On July 29, DZ Bank analyst Ingo Wermann downgraded QUALCOMM Incorporated (NASDAQ:QCOM) to Hold from Buy with a $150 price target. As of August 19, QUALCOMM Incorporated (NASDAQ:QCOM) has sunk by 20.73% year to date.
At the end of Q2 2022, 71 hedge funds held stakes in QUALCOMM Incorporated (NASDAQ:QCOM) worth $2.80 billion. This is compared to 73 positions in the preceding quarter with stakes worth $3.55 billion. The hedge fund sentiment for the stock is negative.
As of June 30, Alkeon Capital Management owns roughly 4.23 million shares of QUALCOMM Incorporated (NASDAQ:QCOM) and is the top shareholder in the company. The fund’s stakes are valued at $541.15 million.
1. General Motors Company (NYSE:GM)
Number of Hedge Fund Holders: 75
On July 26, General Motors Company (NYSE:GM) reported earnings for the fiscal second quarter of 2022. The company reported earnings per share of $1.14 and missed Wall Street expectations by $0.18. The company’s revenue for the quarter amounted to $35.76 billion and beat expectations by $1.41 billion. General Motors Company (NYSE:GM) reported that its U.S. vehicle sales fell by 15% year over year in Q2 2022 amid supply chain constraints and chip shortages.
As of August 19, General Motors Company (NYSE:GM) has lost 35.10% year to date and the company has negative free cash flows of $5.26 billion.
Wall Street is bearish on legacy automakers. On July 18, Deutsche Bank analyst Emmanuel Rosner downgraded General Motors Company (NYSE:GM) to Hold from Buy and slashed his price target to $36 from $57. Rosner sees automakers at risk to revive investor interest as the purchasing power of consumers weakens.
At the end of Q2 2022, 75 hedge funds held stakes in General Motors Company (NYSE:GM) worth $3.44 billion. This is compared to 76 positions in the previous quarter with stakes worth $5.50 billion. The hedge fund sentiment for the stock is negative.
In the second quarter of 2022, Berkshire Hathaway reduced its position in General Motors Company (NYSE:GM) by 15%, bringing its stakes to $1.67 billion. As of June 30, Berkshire Hathaway owns roughly 52.8 million shares of the company and is the largest shareholder.
Here is what Diamond Hill Capital had to say about General Motors Company (NYSE:GM) in its “Diamond Hill Large Cap Fund” first-quarter 2022 investor letter:
“General Motors—and the auto industry in general—continues to face headwinds related to supply chain disruptions and raw material cost inflation. In addition, uncertainty surrounding global energy markets due to inflation and the conflict in Ukraine has created a greater economic burden on consumers, which tends to slow automotive sales.”
You can also take a look at 15 Best Electric Car Stocks to Buy Now and Forget Tesla: 10 Cheap EV Stocks to Buy Now.
