We recently published a list of 12 Best Industrial Distribution Stocks to Buy According to Hedge Funds. In this article, we are going to take a look at where MSC Industrial Supply Co. (NYSE:MSM) stands against other best industrial distribution stocks to buy according to hedge funds.
2025: A Year of Tariffs and Uncertainty
A pressing concern looming over the United States currently is the potential impact of tariffs which have affected distributors as they encountered increased costs for imported goods.
While President Trump has already announced tariffs for Canada, Mexico, and China, CNBC reported that several short- to medium-term effects of this move include a slowdown in global economic growth slowing down, especially in nations with large manufacturing sectors, as well as higher prices for American consumers and higher-for-longer U.S. interest rates, and eventually a stronger USD. Among some of the sectors expected to be hit are industrials and manufacturing other than automotive, makers of chips and semiconductor equipment, consumer goods, Chinese e-retailers, and green energy.
Simultaneously, Trump imposed a 25% tariff on all steel and aluminum imports into the country. According to the New York Times, the effect of these tariffs would flow through to the users of metal goods. Items that are expected to get expensive include construction, housing, and appliances as well as cars, canned food, beer, and fizzy drinks. Amidst concerns regarding how these tariffs would deter development and rebuilding and negate the President’s agenda of making national housing affordable, the National Association of Home Builders has requested to exempt building materials from the tariffs.
Our Methodology
In order to compile a list of the 12 best industrial distribution stocks to buy according to hedge funds, we used a stock screener to screen relevant stocks with the highest market caps. Moving on, we shortlisted the top 12 stocks from our list which had the highest number of hedge fund holders. The 12 best industrial distribution stocks to buy according to hedge funds have been arranged in ascending order of their hedge fund holders as of Q3 2024.
At Insider Monkey we are obsessed with 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).
A machine shop filled with high-precision tools and components representing the quality of the company’s metalworking products.
MSC Industrial Supply Co. (NYSE:MSM)
Number of Hedge Fund Holders: 26
MSC Industrial Supply Co. (NYSE:MSM) is a leading North American distributor of metalworking and maintenance, repair and operations (MRO) products and services. Through more than 2 million product offerings, deep expertise from over 80 years of working across industries, and its inventory management and other supply chain solutions, the company enables customers to drive greater productivity.
MSM is a leader in the North American industrial distribution market which is large and highly fragmented across the addressable market as well as the customer landscape, while the firm has ample opportunities for organic and acquisitive growth. The company boasts industry-leading customer satisfaction ratings, based on a customer-centric culture and delivering solutions driving customer success.
Although MSC Industrial Supply Co. (NYSE:MSM) was subject to a challenging operating environment during fiscal 2025 Q1, the company ended up delivering results exceeding its expectations. While the adjusted operating margin for the quarter exceeded the high end of the firm’s outlook by approximately 50 basis points, the company generated significant free cash flow of $82 million.
Overall, MSM ranks 10th on our list of best industrial distribution stocks to buy according to hedge funds. While we acknowledge the potential of MSM as an investment, our conviction lies in the belief that some deeply undervalued AI stocks hold greater promise for delivering higher returns, and doing so within a shorter time frame. If you are looking for a deeply undervalued AI stock that is more promising than MSM 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.
