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 Westlake Corporation (NYSE:WLK) 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 research engineer conducting a test of the strength of a new thermoplastic composite.
Westlake Corporation (NYSE:WLK)
Number of Hedge Fund Holders: 38
Westlake Corporation (NYSE:WLK) is a global manufacturer of materials and products used in various industries, including packaging, healthcare, automotive, and construction. It is one of the largest producers of low-density polyethylene (LDPE) and polyvinyl chloride (PVC) pipe in North America. Westlake Corporation (NYSE:WLK) is also a major supplier of semi-finished thermoplastic products for extrusion and compression molding.
For the third quarter of 2024, the company reported net sales of $3.1 billion, a decline of 3% from the previous quarter. This decrease was mainly due to a 4% drop in sales volume and production outages at their ethylene joint venture and one of its chlorovinyl facilities. Despite these challenges, the average sales price increased by 1%, indicating some resilience in pricing power. The company’s net income fell to $183 million, primarily impacted by production outages and higher ethylene feedstock costs.
Westlake Corporation (NYSE:WLK) is actively pursuing cost savings initiatives, achieving approximately $35 million in savings during the third quarter alone. This brings the total savings for the year to about $120 million, moving toward their goal of $125 million to $150 million for 2024.
The company is also focused on innovation, developing products like the PVCO pipe and the A-B-A multi-layer pipe technology that incorporates recycled materials. This aligns with Westlake Corporation’s (NYSE:WLK) commitment to sustainability and positions them favorably in the market. During the third quarter, the corporation increased its efforts to obtain recyclable PVC resin. These materials are processed by Westlake Dimex into new products, including matting for consumers and industries, exercise equipment matting, and landscape edging items. With ongoing efforts to enhance operational efficiency and product offerings, Westlake Corporation (NYSE:WLK) demonstrates potential for growth. Its diverse product range and strategic focus on sustainability make it an attractive investment opportunity in the plastics sector.
Overall, WLK ranks 5th on our list of the best plastics stocks to invest in now. While we acknowledge the potential of WLK 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 WLK 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.
