We recently published a list of 15 Stocks That Outperform the S&P 500 Every Year For the Last 3 Years. In this article, we are going to take a look at where Howmet Aerospace Inc. (NYSE:HWM) stands against other stocks that outperform the broader market.
Imagine choosing a group of stocks that not only weathered the market’s storm but also outpaced its peers. Clearly, a win. Such is the case of these 15 stocks that delivered returns greater than what the market had to offer over the last three years. Before we get down to those top-tier winners, let’s discuss what the broader market index actually is.
This may not be something new to seasoned investors. As one of the most widely known benchmarks of the United States, the S&P Index is considered the best gauge of notable American equities’ performance and the health of the economy, in general. Covering around 80% of market capitalization, the S&P is a float-weighted index, which means that the market capitalizations of all the companies included are adjusted by the volume of shares available for trading publicly. Since it’s an index, you can’t just invest in it directly, but rather you can invest in one of the many funds that use it as a benchmark and measure the overall performance.
As a research report by Alex Frino and David R. Gallagher stated:
“Over long horizons, index funds tracking the index consistently outperform the majority of actively managed funds, reflecting the efficiency of broad-market exposure.”
This highlights that S&P index funds generally deliver better results than most actively managed funds.
If we look at the 5-year trend for the broader market, the index witnessed a growth of around 105%. While this may be a decent growth rate, it’s not something truly amazing. The stocks in the index tumbled in 2022, mainly owing to the FED’s shift in monetary policy, the Russia-Ukraine war, and lingering post-COVID supply chain disruptions. Even after this period, the trendline is not something that would break records or catch an eye. In a span of 3 years, the stocks have witnessed a growth of 32%, which is just decent in this high-growth world.
From energy, agriculture, and finance to gold mining, automotive, technology, and construction industries, the companies have showcased strong returns in a short period. This is a result of favorable macroeconomic policies for these markets, particularly with Trump back in office. The stocks we have favored are the ones featuring good performance in the past, as well as the ones surrounding optimism in the future. Thus, we can safely say that it’s still not too late to invest in these stocks. As the elders used to say, “The best time to plant a tree was 20 years ago. The second-best time is now.”
Our Methodology
We have taken a list of 15 companies from Finviz and Yahoo Finance that have witnessed a growth rate of more than 32%, witnessed by the S&P index funds, over three years. These companies then have been listed in descending order, from the highest growth to the lowest growth. The trend line has been captured from Google’s latest stock prices, with respect to the returns of the respective shares.
At Insider Monkey, we are obsessed with hedge funds. Why are we interested in the stocks that hedge funds pile into? 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 373.4% since May 2014, beating its benchmark by 218 percentage points (see more details here).
Engineers examining stress tests of an aircraft engine, working to make sure its ready for flight.
Howmet Aerospace Inc. (NYSE:HWM)
3-Year Return as of the Close of March 12: 279%
Howmet Aerospace Inc. (NYSE:HWM) is a U.S.-based provider of innovative engineering solutions for the aerospace and transportation industries. With four reportable segments including jet engine components, aerospace fastening systems, forged wheels, and airframe structural components, the company seeks to provide solutions by offering differentiated products. Founded in 1888, the company is among the renowned employers of engineers, serving the aerospace and commercial transportation industries across the United States, Japan, France, Germany, China, and the globe.
The potential for the aerospace and transportation market is not something that’s hidden. On that note, the management is pretty optimistic about the industry it operates in, with the global aerospace market expected to grow at a CAGR of 7.2% between 2024 and 2033. This is supported by the management’s guidance, with a sales estimate of 8% and EBITDA growth of 11% in 2025 alone.
What has previously contributed to growth is its strong financial health, low debt, and focus on shareholder returns. A testament to Howmet Aerospace Inc. (NYSE:HWM)’s resilience is that despite headwinds from the challenges at Boeing, the company’s earnings grew. The company proved that strengthened margins are not always a consequence of improved sales, which actually dipped by 12% in line with weak Commercial Transportation in the last quarter of 2024, but rather a result of cost management, higher productivity, and headcount reductions. And maybe this is how it outperformed the broader market.
Howmet Aerospace Inc. (NYSE:HWM)’s future outlook is simple. With Boeing signaling that it has a straightforward path towards a production rate of 38 airplanes per month, up from 25 planes per month, we have a bull case for HWM. Not only this, Airbus and COMAC are expected to increase production in 2025.
Overall, HWM ranks 5th on our list of stocks that outperform the broader market. While we acknowledge the potential for HWM as an investment, our conviction lies in the belief that some 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 HWM but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. This article is originally published at Insider Monkey.
