We recently compiled a list of the 10 Best Plastics and Rubber Stocks to Buy According to Analysts. In this article, we are going to take a look at where Exxon Mobil Corporation (NYSE:XOM) stands against the other best plastics and rubber stocks to buy according to analysts.
According to the U.S. Bureau of Labor Statistics, a crucial component of the manufacturing industry, the Plastics and Rubber Products Manufacturing subsector produces commodities by processing raw rubber and plastic materials. Rubber Product Manufacturing and Plastics Product Manufacturing are the two primary groups that make up the industry. Since rubber is increasingly being replaced by plastics, the subsector mostly concentrates on single-material goods. First-line supervisors, team assemblers, and machine operators are important jobs in this industry. As of December 2024, the subsector employed about 718,300 people, of whom 545,300 were production and nonsupervisory workers. All employees made an average of $29.68 per hour, with production workers making $25.03. In 2023, the median yearly salary for occupations was $36,140 for hand packers and $67,440 for first-line managers.
The dynamics of the industry are reflected in workplace safety and pricing patterns. As per the aforementioned report, the subsector recorded 16 fatalities and 2.9 recordable injury cases per 100 full-time employees in 2023. As the number of enterprises steadily increased to 14,536 in Q2 2024, productivity remained a priority. While import and export price indexes showed stability in December 2024, price trends as shown by the Producer Price Index (PPI) showed a minor decline (-0.1%). By striking a balance between labor demands, safety regulations, and pricing pressures, the industry’s performance and trends highlight its importance to the economy.
According to a report by MNI, there are 13,675 businesses in the rubber and plastics industry in the United States, and their yearly sales total $553 billion. In 2023, employment increased from 846,729 to 858,177, a 1.35% growth. Public ownership is 9%, compared to 5% in manufacturing, while minority and female ownership rates are 2% and 1%, respectively. Materials are imported at a rate of 19% compared to 11% for manufacturing as a whole, while exports reach 42% of distribution, which is higher than the manufacturing average of 29%. The Midwest has 35% of manufacturers, whereas the South has 31%. This is due to the region’s close proximity to major automotive hubs like Kentucky.
The market for rubber and plastic products has expanded significantly in recent years. According to The Business Research Company, it will increase at a compound annual growth rate (CAGR) of 7.5% by 2025. The historical period saw growth due to industrialization and manufacturing expansion, automotive industry expansion, consumer goods production, medical and healthcare sector growth, and packaging industry evolution. The market for rubber and plastic products is also projected to increase significantly during the next years. It will increase at a compound annual growth rate (CAGR) of 6.5%.
Interestingly, as per the latest report, R&D expenditure in the U.S. plastics and rubber manufacturing sector doubled the national average growth rate in 2024, rising 19.4% to $3.1 billion from $2.6 billion in 2023. After a five-year downturn in which R&D investment fell by 16.2%, this represents a recovery. Driven by improvements in polymer materials, production efficiency, and sustainable product development, this sector currently ranks twelfth in terms of R&D investment increase among all sectors in the U.S.
Jordan Fazio, senior director of R&D tax credit at Source Advisors, stated:
“Investment in R&D is no longer optional but a strategic necessity to stay ahead in the competitive landscape. We’ve seen through working with national and international firms in the plastics and rubber manufacturing sector the increased importance placed on being at the forefront of technology to improve existing services and identify new innovation routes”
Overall, the investors have witnessed financial gains as the global materials industry of the broader market has grown by 4.25% since the beginning of the year and by 6.18% in the past year.
A refinery, the sun illuminating its engineering complexity.
Methodology
We sifted through online rankings to form an initial list of 20 plastics and rubber stocks. From the resultant dataset, we chose 10 stocks with a projected upside potential of at least 15% based on analyst price targets as of January 13. The stocks are ranked according to their upside potential. We also considered hedge fund sentiment around each stock using Insider Monkey’s data for Q3 2024.
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 275% since May 2014, beating its benchmark by 150 percentage points. (see more details here)
Exxon Mobil Corporation (NYSE:XOM)
Upside Potential as of January 13: 18.34%
Exxon Mobil Corporation (NYSE:XOM) is best known as an oil and gas firm, but it is also a large manufacturer of specialty polypropylene, a raw material used in plastics, placing it among the Best Plastics Stocks. Propylene is a chemical created during the oil refining process, making it a natural outgrowth of Exxon’s primary business. When more masks and medical supplies were needed in 2020 to support the COVID-19 pandemic response, the company dramatically increased its output of polypropylene. Although plastics provide some diversification from Exxon’s primary petroleum supplies, the company is nonetheless firmly rooted in the fossil fuel energy system.
Exxon Mobil Corporation (NYSE:XOM) is investing more than $200 million in Texas to enhance innovative recycling facilities, bringing annual capacity to 500 million pounds and aiming for 1 billion pounds by 2027. The method reduces waste and promotes a circular economy by turning difficult-to-recycle plastics into raw materials for high-performance products. Exxon Mobil meets the increasing demand in industries like pet food and food-safe packaging by providing advanced recycling services to clients in more than 15 countries.
Exxon Mobil Corporation (NYSE:XOM) recorded one of its strongest third-quarter results in a decade with earnings of $8.6 billion. On a constant margin basis, year-to-date 2024 earnings have doubled from 2019 levels due to cost reductions, including a 24% drop in turnaround costs for Energy Products. Following 42 years of yearly dividend growth, the business announced a 4% dividend increase in 2024. In comparison to the previous year, upstream production increased by 24% to 4.6 million oil-equivalent barrels per day. Furthermore, the firm advanced hydrogen production and secured the largest offshore CO2 storage site in the United States, showcasing its success in low-carbon solutions.
On January 13, 2024, Truist lifted the price target for Exxon Mobil Corporation (NYSE:XOM) to $119 from $117. Based on minimally lower commodity prices, minimally higher production, flat costs, minimal asset degradation, and minimal to moderate operational efficiencies, Truist projected sequentially higher estimated 2026 earnings and free cash flows. It also notes that it believes commodity prices, particularly those of oil and natural gas, will remain firmer this year than many investors currently anticipate.
According to the 18 analysts, the average 12-month price projection for Exxon Mobil Corporation (NYSE:XOM) stock is $86.66, showing an 18.34% increase from the company’s current price of $73.26. The range of estimates is between $64 and $102.
Paul Cantor, Joseph Weiss, And Will Wurm’s Beech Hill Partners was the only stakeholder in the company from among the funds in Insider Monkey’s database at the end of Q3 2024. It owns 7,227 shares worth $777,408 as of Q3.
Overall, XOM ranks 8th on our list of the best plastics and rubber stocks to buy according to analysts. While we acknowledge the potential for XOM to grow, 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 XOM 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.