We recently compiled a list of the 10 Best Industrial Stocks to Buy According to Hedge Funds. In this article, we are going to take a look at where Danaher Corporation (NYSE:DHR) stands against the other industrial stocks.
Industrial stocks in the United States encompass a broad range of sectors including manufacturing, transportation, aerospace, defense, and construction. These sectors form the backbone of the American economy, driving innovation, employment, and growth. Companies within this category often engage in the production of machinery, equipment, and infrastructure essential for various industries. The performance of industrial stocks is closely tied to the overall health of the economy. Economic expansion typically boosts demand for industrial goods and services, while recessions can lead to contractions in this sector.
Recently, industrial stocks have shown resilience amid global supply chain disruptions and economic uncertainty, thanks in part to technological advancements and diversified service offerings. Advancements in automation, robotics, and artificial intelligence are transforming the industrial landscape. Companies are increasingly investing in smart manufacturing technologies to enhance productivity and reduce operational costs. Environmental concerns and regulatory pressures are pushing industrial firms toward sustainable practices. Companies are adopting greener technologies and renewable energy sources to meet regulatory standards and consumer expectations. Industrial stocks play a vital role in the US economy, offering a diverse range of investment opportunities. Understanding the dynamics of different sectors, keeping abreast of market trends, and evaluating economic indicators are crucial for making informed investment decisions in this space. With continued advancements in technology and a focus on sustainable practices, the industrial sector remains a critical and evolving component of the financial market landscape. Overall, industrial stocks returned close to 10% so far in 2024.
According to Federal Reserve Industrial Production and Capacity Utilization report, most major market groups saw gains in May. Consumer goods increased by 1.3 percent, driven by rises across all components except home electronics. Business equipment edged up by 0.2 percent despite a drop in transit, buoyed by gains in information processing and industrial sectors. Defense and space equipment rose by 1.0 percent, marking a nearly 10 percent increase from a year ago. The materials market group saw a 0.8 percent increase, with non-energy durables and non-energy nondurables each up by around 1 percent, and energy materials rising by 0.6 percent. In manufacturing, overall output rose by 0.9 percent in May, slightly above last year’s level. Durable manufacturing increased by 0.6 percent, nondurables by 1.1 percent, and other manufacturing (publishing and logging) by 0.2 percent. Within durable manufacturing, notable gains were seen in wood products (up 2.6 percent), machinery (up 2.3 percent), and computer/electronic products (up 0.8 percent). Furniture and related products saw the largest decline (down 2.6 percent). In nondurables, printing and support activities decreased by 1.5 percent, while other categories saw gains. Mining output rebounded with a 0.3 percent increase in May, following declines in the previous two months. Oil and gas extraction rose, offsetting decreases in other mining and support activities. Utilities output grew by 1.6 percent, surpassing last year’s level by 3.9 percent. Capacity utilization for manufacturing rose to 77.1 percent in May, slightly below its long-run average. Mining’s operating rate reached 92.7 percent, well above its average, while utilities remained notably below their typical operating levels despite a slight increase to 71.5 percent.
So, what are the best industrial stocks to buy in this current environment?
Our Methodology
We leveraged Insider Monkey’s comprehensive database of 920 prominent hedge funds to identify the top 10 industrial stocks with the highest level of hedge fund investment as of Q1 2024. These stocks are listed in order of increasing hedge fund ownership, providing insight into the most popular industrial stocks among elite investors.
A healthcare professional in a lab coat holding a microscope and looking at a slide under the lens.
Danaher Corporation (NYSE:DHR)
Number of Hedge Funds Holders: 98
Danaher Corporation (NYSE:DHR) ranks second on our list of best industrial stocks to buy according to hedge funds. During Q1, 2024 the count of hedge funds holding positions in Danaher Corporation (NYSE:DHR) rose to 98 from 90 in the prior quarter, as reported by Insider Monkey’s database encompassing 920 hedge funds. These holdings collectively amount to around $6.96 billion. Ken Fisher’s Fisher Asset Management emerged as the leading shareholder among these hedge funds during this timeframe.
Danaher Corporation (NYSE:DHR) announced that Executive Vice President Joakim Weidemanis will step down effective July 1, and will assist with the transition until September 30. The company and Weidemanis have a Transition Agreement ensuring he retains his current salary and is eligible for a pro-rated 2024 cash incentive compensation based on his target award. If terminated without cause during the transition, Weidemanis will receive his salary and pro-rated incentive for the entire period. Danaher Corporation (NYSE:DHR) reported strong Q1 results with $5.8 billion in revenue and $1.92 in adjusted diluted EPS, driven by growth in bioprocessing and subsidiary Cepheid. TD Cowen raised the stock target from $280 to $290, maintaining a Buy rating, reflecting confidence in Danaher’s Bioproduction, Diagnostics, and Life Sciences segments. Despite an expected slight revenue decline in 2024, Danaher Corporation (NYSE:DHR) remains optimistic about its long-term outlook.
RGA Investment Advisors stated the following regarding Danaher Corporation (NYSE:DHR) in its first quarter 2024 investor letter:
“In our Q3 2023 commentary, we featured a section on our investment in Danaher Corporation (NYSE:DHR) entitled “Purity in the Crown Jewel of Bioprocessing.” Specifically, we were speaking to Cytiva, Danaher’s bioprocessing business formed by the merger of Pall Corp and GE’s bioprocessing division. We will not repeat the features that attract us to bioprocessing in general, nor the elements of timeliness, though we will emphasize that our confidence in timeliness has actually increased since writing that piece. While Danaher has performed admirably ever since, its peer Sartorius, which was referenced by labeling bioprocessing “an oligopolistic market, with a small number of critical players and extremely high barriers to entry.”
Overall DHR ranks 2nd on our list of the best industrial stocks stocks to buy. You can visit 10 Best Industrial Stocks to Buy According to Hedge Funds to see the other industrial stocks that are on hedge funds’ radar. While we acknowledge the potential of DHR as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than DHR 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.