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 W.W. Grainger, Inc. (NYSE:GWW) 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 portrait of an industrial worker wearing safety equipment, smiling while inspecting a piece of equipment.
W.W. Grainger, Inc. (NYSE:GWW)
Number of Hedge Fund Holders: 34
W.W. Grainger, Inc. (NYSE:GWW) is a broad line, distributor of maintenance, repair and operating (MRO) products and services with operations in North America, Japan, and the United Kingdom. The firm operates through two segments, High-Touch Solutions North America (High-Touch Solutions N.A.) segment which primarily includes the Grainger-branded businesses in the US, Canada, Mexico, and Puerto Rico, and the Endless Assortment segment which includes the firm’s Zoro Tools, Inc. (Zoro) and MonotaRO Co., Ltd. (MonotaRO) online channels operating predominately in the US and Japan.
Grainger is an industry leader in a large and highly attractive market with the opportunity to capture market share. A world-class supply chain and a massive scale deem the company a significant player in industrial distribution. Grainger offers approximately 2 million maintenance, repair and operating (MRO) products and services in the High-Touch Solutions segment while the Endless Assortment segment boasts Zoro.com offering customers access to over 14 million products, and MonotaRO.com offering over 24 million products.
W.W. Grainger, Inc. (NYSE:GWW) advanced its capabilities and deepened its customer relationships across both of its segments through a challenging 2024 where demand remained muted. Total company sales increased 4.2% year over year for the full year 2024. Additionally, Grainger generated a strong operating cash flow of over $2.1 billion and returned $1.6 billion to shareholders through dividends and share repurchases.
Overall, GWW ranks 6th on our list of best industrial distribution stocks to buy according to hedge funds. While we acknowledge the potential of GWW 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 timeframe. If you are looking for a deeply undervalued AI stock that is more promising than GWW 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.
