We recently compiled a list of the 8 Best Plastics Stocks To Invest In Now. In this article, we are going to take a look at where DuPont de Nemours Inc. (NYSE:DD) stands against the other plastics stocks.
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.
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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.
Our 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).
A close-up of a factory worker handling advanced plastics materials with specialized machinery.
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.
Overall, DD ranks 2nd on our list of the best plastics stocks to invest in now. While we acknowledge the potential of DD as an investment, 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 DD 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.