In this article, we will take a look at the 8 best plastics stocks to invest in now.
Key Trends and Challenges Facing the Plastics Industry
The importance of plastics in modern society cannot be overstated. They play a vital role in various industries, including automotive, construction, food and beverage, and healthcare. Plastics are lightweight, durable, and versatile, making them essential for the production of a wide array of products that enhance our daily lives.
Additionally, the plastics industry plays a crucial role in the global economy, contributing significantly to job creation and innovation. According to the Plastics Industry Association’s 2024 Size and Impact Report, the US plastics sector alone accounted for over 1 million jobs and generated $519.1 billion in shipments in 2023. This sector has shown resilience, with plastics manufacturing employment growing at a rate of 1.1% annually from 2013 to 2023, outpacing the overall manufacturing growth of 0.7% during the same period.
READ ALSO: 10 Undervalued Chemical Stocks to Invest In and 7 Most Profitable Food Stocks To Invest In.
Recent trends indicate a strong push towards sustainability within the plastics sector. Companies are increasingly investing in recycling technologies and circular economy initiatives to reduce waste and improve environmental outcomes. According to a report by The Business Research Company, the global plastic recycling market was valued at $41.71 billion in 2023. The market is expected to expand at a compound annual growth rate (CAGR) of 8.1% during 2024-2028 to reach a value of $61.56 billion by the end of the forecast period.
According to the United Nations Environment Programme (UNEP), the production of plastic has been increasing rapidly since the 1970s, outpacing the growth of any other material. Global plastic production could reach 1,100 million tonnes by 2050. A significant portion of this plastic, around 36%, is used for packaging, including single-use items like food and beverage containers. Unfortunately, about 85% of these single-use plastics end up in landfills or as unmanaged waste, contributing to a growing environmental crisis.
Demand for plastics is expected to remain high in the coming years. While limiting plastic production may seem beneficial for the environment, it could lead to unintended negative consequences for economies worldwide, particularly affecting those in developing regions that rely on affordable plastic products.
The plastics industry is not only vital for economic stability but also plays a crucial role in addressing modern sustainability challenges. With ongoing investments in recycling and innovation, the plastics industry is expected to continue to thrive while adapting to changing consumer preferences and regulatory landscapes.
Now that we have discussed some of the key trends in the global plastics industry, let’s take a look at the 8 best plastics stocks to invest in now.
A huge plastic bottle manufacturing facility, showcasing the company’s proprietary processes for plastic packaging.
Methodology
To compile our list of the 8 best plastics stocks to invest in now, we looked for the largest plastics companies. We also reviewed our own rankings and consulted various online resources to compile a list of the best plastics stocks.
From an initial pool of more than 20 plastics stocks, we focused on the top 8 stocks most favored by institutional investors. Data for the hedge fund sentiment surrounding each stock was taken from Insider Monkey’s Q3 2024 database of 900 elite hedge funds. The 8 best plastics stocks to invest in now are ranked in ascending order based on the number of hedge funds holding stakes in them as of Q3 2024.
Why do we care about what hedge funds do? 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).
8 Best Plastics Stocks To Invest In Now
8. Silgan Holdings Inc. (NYSE:SLGN)
Number of Hedge Fund Holders: 25
Silgan Holdings Inc. (NYSE:SLGN) is a prominent American manufacturer specializing in sustainable rigid packaging solutions for essential consumer goods. The company produces a wide range of packaging products, including containers and closures, to serve the food, healthcare, personal care, and household sectors. Silgan Holdings Inc. (NYSE:SLGN) is a leading supplier of high-barrier plastic containers, partnering with global brands to provide effective shelf-stable food packaging solutions.
In the third quarter of 2024, the company reported net sales of $1.75 billion, reflecting a decrease of 3% compared to the previous year. This decline was largely due to the contractual pass through of lower raw material costs in the Metal Containers segment. Despite this, the company achieved double-digit growth and reached record volumes in its dispensing products. It also reported a record adjusted EBIT in the Dispensing and Specialty Closures segment for the third quarter. Furthermore, during the third quarter, Silgan Holdings Inc. (NYSE:SLGN) renewed a long-term contract with its largest customer in the Metal Containers segment, reinforcing its strong market position.
Additionally, on October 15, 2024, Silgan Holdings Inc. (NYSE:SLGN) announced that it has completed its acquisition of Weener Plastics Holdings B.V., a key player in differentiated dispensing solutions. This acquisition is expected to enhance the company’s global dispensing business and contribute positively to earnings per share in 2024 and beyond. With the recent acquisition and strong performance in key segments, Silgan Holdings Inc. (NYSE:SLGN) presents a compelling investment opportunity. SLGN ranks among the best plastics stocks to invest in now.
7. Eastman Chemical Company (NYSE:EMN)
Number of Hedge Fund Holders: 26
Eastman Chemical Company (NYSE:EMN) is an American chemical and specialty materials company that produces a wide range of advanced materials, chemicals, fibers, and plastics. The company’s products are used in various everyday items. Eastman Chemical Company (NYSE:EMN) serves key markets like transportation, building, construction, and consumer goods.
In its third-quarter 2024 financial results, the company reported a 9% increase in sales revenue. This growth was fueled by an 8% rise in sales volume. Earnings before interest and taxes (EBIT) improved significantly to $329 million, up from $256 million in the same quarter last year. Eastman Chemical Company’s (NYSE:EMN) cash from operations was $396 million, demonstrating strong financial health.
The company is also advancing its circular economy initiatives with plans to construct a second methanolysis facility in Longview, Texas. This move is in line with the company’s commitment to innovation and sustainable practices, which was also highlighted during their Circular Economy Deep Dive event in November 2024. Eastman Chemical Company (NYSE:EMN) projects substantial financial growth, estimating over $2.1 billion in EBITDA and an additional $500 million from its circular initiatives by 2029, showcasing its potential as a strong investment opportunity.
To meet its goals for EBITDA from its circular initiatives, Eastman Chemical Company (NYSE:EMN) plans to invest significantly in organic growth. The company expects to spend about $800 million on capital projects in 2025. For 2026 and 2027, capital expenditures are expected to be between $800 million and $1 billion.
6. Dow Inc. (NYSE:DOW)
Number of Hedge Fund Holders: 31
Dow Inc. (NYSE:DOW) is a leading chemical and materials company that serves various high-growth markets, including packaging, infrastructure, mobility, and consumer applications. It is a major producer of essential plastics such as polystyrene, polyurethane, polyethylene, and polypropylene.
In June 2024, Dow Inc. (NYSE:DOW) announced its agreement to acquire Circulus, a prominent recycler specializing in converting plastic waste into post-consumer resin (PCR). This acquisition includes two facilities in Ardmore, Oklahoma, and Arab, Alabama, with a combined capacity of 50,000 metric tons per year. By integrating Circulus’ recycling capabilities with its own advanced materials science expertise, Dow Inc. (NYSE:DOW) aims to enhance its product offerings for applications like collation shrink packaging, stretch film, liners, and food packaging. This move aligns with the company’s commitment to transforming plastic waste into 3 million metric tons of circular and renewable solutions annually by 2030.
Additionally, on December 2, 2024, the company completed the sale of its flexible packaging laminating adhesives business for $150 million. This strategic divestiture supports Dow Inc.’s (NYSE:DOW) focus on higher-value growth areas. Proceeds from the sale of the flexible packaging laminating adhesives business will support Dow Inc.’s (NYSE:DOW) capital allocation priorities. Dow Inc.’s (NYSE:DOW) growth strategy emphasizes investments in high-demand sectors where it holds a competitive advantage. The company anticipates generating over $2 billion in underlying EBITDA from its near-term growth projects.
In the third quarter, Dow Inc. (NYSE:DOW) also expanded its circular product line by introducing new offerings. This includes REVOLOOP Recycled Plastic Resins, which use post-consumer recycled materials for cable jacketing. The company also launched its first Bio Circular Engage REN polyolefin elastomers designed for carpet tile backing. With a strong market position and ongoing efforts to enhance its circular economy initiatives, Dow Inc. (NYSE:DOW) represents an attractive investment opportunity for those looking to buy into the plastics sector.
5. Westlake Corporation (NYSE:WLK)
Number of Hedge Fund Holders: 38
Westlake Corporation (NYSE:WLK) is a global manufacturer of materials and products used in various industries, including packaging, healthcare, automotive, and construction. It is one of the largest producers of low-density polyethylene (LDPE) and polyvinyl chloride (PVC) pipe in North America. Westlake Corporation (NYSE:WLK) is also a major supplier of semi-finished thermoplastic products for extrusion and compression molding.
For the third quarter of 2024, the company reported net sales of $3.1 billion, a decline of 3% from the previous quarter. This decrease was mainly due to a 4% drop in sales volume and production outages at their ethylene joint venture and one of its chlorovinyl facilities. Despite these challenges, the average sales price increased by 1%, indicating some resilience in pricing power. The company’s net income fell to $183 million, primarily impacted by production outages and higher ethylene feedstock costs.
Westlake Corporation (NYSE:WLK) is actively pursuing cost savings initiatives, achieving approximately $35 million in savings during the third quarter alone. This brings the total savings for the year to about $120 million, moving toward their goal of $125 million to $150 million for 2024.
The company is also focused on innovation, developing products like the PVCO pipe and the A-B-A multi-layer pipe technology that incorporates recycled materials. This aligns with Westlake Corporation’s (NYSE:WLK) commitment to sustainability and positions them favorably in the market. During the third quarter, the corporation increased its efforts to obtain recyclable PVC resin. These materials are processed by Westlake Dimex into new products, including matting for consumers and industries, exercise equipment matting, and landscape edging items. With ongoing efforts to enhance operational efficiency and product offerings, Westlake Corporation (NYSE:WLK) demonstrates potential for growth. Its diverse product range and strategic focus on sustainability make it an attractive investment opportunity in the plastics sector.
4. LyondellBasell Industries N.V. (NYSE:LYB)
Number of Hedge Fund Holders: 38
LyondellBasell Industries N.V. (NYSE:LYB) is an American multinational chemical company that produces and sells plastics, petrochemicals, and basic chemicals. The company’s products are used in many industries, including automotive, construction, and food packaging. LyondellBasell Industries N.V. (NYSE:LYB) is one of the world’s largest producers of polymers.
In September 2024, the company began constructing its MoReTec-1 facility in Wesseling, Germany. This plant will utilize the company’s proprietary advanced recycling technology to produce 50,000 metric tons of recycled feedstocks annually from hard-to-recycle plastic waste. The European Union has recognized this initiative with a €40 million grant, highlighting LyondellBasell’s (NYSE:LYB) commitment to sustainable practices. The facility, designed to achieve high plastic-to-plastic yields, is expected to start operations in 2026 and will significantly reduce the carbon footprint compared to traditional fossil-based feedstocks.
The company’s financial performance remains strong, with a reported EBITDA of $1.2 billion in the third quarter of 2024. In North America, integrated polyethylene margins have improved due to favorable raw material costs and increased polyethylene prices. Year-to-date demand for polyethylene and polypropylene has risen by over 7% and 4% year-over-year, respectively.
LyondellBasell Industries N.V. (NYSE:LYB) is exiting the refining business, with plans to shut down its Houston refinery by the end of the first quarter of 2025. This decision is part of a strategy to move away from a business that has been unstable and offers low-profit margins. The company aims to redirect its efforts towards creating sustainable value. As of the end of the third quarter in 2024, LyondellBasell (NYSE:LYB) reported having $2.6 billion in cash and short-term investments, along with $7.3 billion in available liquidity. This strong financial position supports their investment-grade balance sheet, allowing them to focus on future growth opportunities.
The combination of innovative recycling technology, strong financials, and a clear focus on sustainability positions LyondellBasell Industries N.V. (NYSE:LYB) as an attractive investment opportunity in the plastics sector.
3. Carlisle Companies Incorporated (NYSE:CSL)
Number of Hedge Fund Holders: 40
Carlisle Companies Incorporated (NYSE:CSL) is a key player in the manufacturing of plastic products, particularly in the building materials sector. The company is dedicated to creating building products and solutions for energy-efficient buildings.
On October 17, 2024, Carlisle Companies Incorporated (NYSE:CSL) announced its plan to acquire the expanded polystyrene (EPS) insulation segment of PFB Holdco, which includes the Plasti-Fab and Insulspan brands. This acquisition, valued at $259.5 million, will enhance Carlisle’s (NYSE:CSL) position in the $1.5 billion North American expanded polystyrene insulation market. By integrating Plasti-Fab’s capabilities, Carlisle Companies Incorporated (NYSE:CSL) aims to strengthen its product offerings and fill geographic gaps in both the US and Canada.
The acquisition aligns with Carlisle’s (NYSE:CSL) Vision 2030 strategy, which emphasizes growth through innovation and strategic acquisitions. The company expects this move to generate around $14 million in annual cost synergies and boost its adjusted earnings per share by approximately $0.30 in 2025. Carlisle Companies Incorporated (NYSE:CSL) is also significantly increasing its investment in research and development, targeting $1 billion over the Vision 2030 timeframe. This investment aims to drive new product development, with a goal of generating 25% of revenue from new products, up from 15% currently.
These strategic initiatives highlight Carlisle’s (NYSE:CSL) commitment to enhancing its product portfolio and market presence. CSL ranks among the best plastics stocks to buy now.
2. DuPont de Nemours Inc. (NYSE:DD)
Number of Hedge Fund Holders: 47
DuPont de Nemours Inc. (NYSE:DD) is an American multinational company that develops and manufactures technology-based materials and solutions for various sectors, including automotive, construction, electronics, water, healthcare, and worker safety. The company is a major producer of fiber and plastics products.
The company has made significant strides in expanding its capabilities and market presence through strategic acquisitions. In August 2023, DuPont de Nemours Inc. (NYSE:DD) completed the acquisition of Spectrum Plastics Group, a leader in specialty medical devices and components markets. This move enhances DuPont’s (NYSE:DD) offerings in the healthcare sector and complements the company’s offerings for biopharma and pharma processing, medical devices and packaging, including DuPont’s (NYSE:DD) LiveoTM silicone solutions and Tyvek Medical Packaging.
On July 29, 2024, DuPont de Nemours Inc. (NYSE:DD) further strengthened its position by completing the acquisition of Donatelle Plastics, a company known for its expertise in medical device manufacturing. This acquisition not only expands DuPont’s (NYSE:DD) technological capabilities but also aligns with its focus on high-growth therapeutic areas like drug delivery and diagnostics. The combination of Spectrum and Donatelle underlines DuPont’s (NYSE:DD) strategy to leverage advanced technologies to enhance its healthcare solutions.
Financially, DuPont de Nemours Inc. (NYSE:DD) reported a robust Operating EBITDA of $467 million for its Electronics & Industrial segment in Q3 2024, marking a 22% increase from the previous year. This growth was driven by higher production rates, volume growth, savings from restructuring actions, and earnings contribution from its recent acquisitions. These strategic moves indicate that DuPont de Nemours Inc. (NYSE:DD) is well-positioned for future growth in the plastics sector, particularly in healthcare applications. Its focus on innovation and expansion into high-demand markets makes it a compelling stock to consider for investors looking for opportunities in the plastics industry.
1. Exxon Mobil Corporation (NYSE:XOM)
Number of Hedge Fund Holders: 86
Exxon Mobil Corporation (NYSE:XOM) is an American multinational oil and gas corporation and one of the largest integrated fuels, lubricants, and chemical companies in the world. The company is also a major producer of a variety of advanced plastics, including polypropylene and polyethylene.
The company is making significant strides in the field of advanced recycling, which positions it as a promising investment opportunity for those interested in plastics. On November 21, 2024, Exxon Mobil Corporation (NYSE:XOM) announced a substantial investment of over $200 million to enhance its advanced recycling operations at its facilities in Baytown and Beaumont, Texas. This expansion will enhance the company’s ability to recycle hard-to-process plastics and divert them from landfills. The advanced recycling process transforms plastic waste into raw materials for various products, including fuels and high-performance plastics and chemicals. This method can handle types of plastic that traditional recycling cannot, helping to reduce waste and support a circular economy for plastics.
With this investment, Exxon Mobil Corporation (NYSE:XOM) will boost its annual recycling capacity to 500 million pounds, moving closer to its goal of reaching 1 billion pounds per year by 2027. Exxon Mobil (NYSE:XOM) is also developing additional recycling projects across North America, Europe, and Asia. The company has advanced recycling customers in over 15 countries across various sectors, such as food-safe packaging and pet food, where demand is growing.
Exxon Mobil Corporation (NYSE:XOM) is also advancing its technology-driven businesses, particularly with its innovative Proxxima thermoset resin. This new material is not only stronger and lighter than traditional options, but it also boasts superior corrosion resistance. Exxon Mobil (NYSE:XOM) estimates that the total addressable market for Proxxima could reach 5 million tons per year and a potential market value of $30 billion by 2030. Exxon Mobil Corporation’s (NYSE:XOM) strong market presence, combined with its strategic investments in advanced materials, positions it as a strong stock to consider for investors looking for growth in the plastics and materials sector.
Overall, XOM ranks first among the 8 best plastics stocks to invest in now. While we acknowledge the potential of plastics companies, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns, and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than XOM but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
READ NEXT: 8 Best Wide Moat Stocks to Buy Now and 30 Most Important AI Stocks According to BlackRock.
Disclosure: None. Insider Monkey focuses on uncovering the best investment ideas of hedge funds and insiders. Please subscribe to our free daily e-newsletter to get the latest investment ideas from hedge funds’ investor letters by entering your email address below.
