Manufacturing is the lifeblood of any country's economy. That's why many investors have one or more manufacturing stocks in their portfolios. However, while you can find some buy-and-hold forever stocks in this group, many are cyclical in nature.
Those cyclical stocks tend to outperform the market when the economy is expanding. But when the economy is contracting, these stocks can fall back. In 2024, the outlook for the economy continues to give off mixed signals, but there are signs that manufacturing may be getting ready to recover.
If that's the case, you'll want to look for best-in-class companies that can outperform the market. This special presentation highlights 7 manufacturing stocks to buy as activity in the sector increases. Each of these stocks may make good long-term investments, but they look particularly attractive before the sector really heats up.
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- General Electric
- Alcoa
- Taiwan Semiconductor Manufacturing Company
- Packaging Corporation of America
- Agilent Technologies
- Hillenbrand
- Steelcase
#1 - General Electric (NYSE:GE)
It's safe to say that this isn't your grandfather's or even your father's General Electric (NYSE: GE). In fact, General Electric is now GE Aerospace. The company completed the spin-off of its energy division, GE Vernova, on April 2, 2024. That followed a spin-off of its healthcare unit in 2023.
That definitely simplifies the business model for investors. Chief executive officer (CEO) Larry Culp has purposefully worked to streamline GE's business since taking over the reins in 2018.
The aerospace division has long been considered the most appealing part of the company's business. It does have exposure to The Boeing Co. (NYSE: BA) and its 737-Max. But any headwinds that provides in the near term are far outweighed by the order book that the company is likely to have for years to come.
GE stock shot higher after the spin-off, and the General Electric analyst ratings on MarketBeat suggest that the stock may have a downside of over 4%. But an impressive 250% increase in the company's dividend is likely to keep current investors on board and provides an incentive for other investors to take a closer look.
About General Electric
General Electric Company, doing business as GE Aerospace, designs and produces commercial and defense aircraft engines, integrated engine components, electric power, and mechanical aircraft systems. It also offers aftermarket services to support its products. The company operates in the United States, Europe, China, Asia, the Americas, the Middle East, and Africa.
Read More - Current Price
- $168.37
- Consensus Rating
- Moderate Buy
- Ratings Breakdown
- 14 Buy Ratings, 1 Hold Ratings, 0 Sell Ratings.
- Consensus Price Target
- $201.93 (19.9% Upside)
#2 - Alcoa (NYSE:AA)
Alcoa Corporation (NYSE: AA) is one of the world's leading miners of bauxite and a provider of aluminum products. Like many companies that are tied closely to a metal like aluminum, the stock is affected by underlying commodity prices.
For much of 2023, AA stock was falling along with demand for aluminum. However, in October 2023, demand trends shifted, and so did the direction of Alcoa's stock. Aluminum demand is expected to continue to be strong through 2024. And Alcoa, which has been posting negative earnings per share (EPS), is expecting to not only deliver positive earnings, but to have earnings growth of 300%.
That growth is likely not factored into AA stock. As of April 5, 2024, analysts have a consensus rating of Hold on AA stock. Some of that sentiment is based on concerns over demand in China. However, that sentiment could change quickly if the company hits its bullish earnings targets over the next few quarters.
About Alcoa
Alcoa Corporation, together with its subsidiaries, produces and sells bauxite, alumina, and aluminum products in the United States, Spain, Australia, Iceland, Norway, Brazil, Canada, and internationally. The company operates through two segments, Alumina and Aluminum. It engages in bauxite mining operations; and processes bauxite into alumina and sells it to customers who process it into industrial chemical products, as well as aluminum smelting and casting businesses.
Read More - Current Price
- $37.84
- Consensus Rating
- Moderate Buy
- Ratings Breakdown
- 8 Buy Ratings, 3 Hold Ratings, 0 Sell Ratings.
- Consensus Price Target
- $46.73 (23.5% Upside)
#3 - Taiwan Semiconductor Manufacturing Company (NYSE:TSM)
Taiwan Semiconductor Manufacturing Company (NYSE: TSM) is up 56% in the last 12 months fueled by the demand for artificial intelligence (AI) applications. At about 22x forward earnings as of this writing, TSM stock isn't too expensive, but some analysts are concerned that much of the growth is priced in.
On the other hand, Taiwan Semiconductor stands to receive $5 billion in U.S. government grants for setting up a chipmaking plant in Arizona. The company has plans to invest $40 billion to build a plant in Arizona. That would be one of the largest foreign investments in U.S. history.
That said, TSM stock is down about 5.25% in the last month. And that could be a very good thing for investors looking to take a position. The Taiwan Semiconductor Analyst Ratings on MarketBeat give the stock a Moderate Buy rating with a $138.25 price target. That tells investors to wait for a pullback in TSM stock before taking a position.
About Taiwan Semiconductor Manufacturing
Taiwan Semiconductor Manufacturing Company Limited, together with its subsidiaries, manufactures, packages, tests, and sells integrated circuits and other semiconductor devices in Taiwan, China, Europe, the Middle East, Africa, Japan, the United States, and internationally. It provides a range of wafer fabrication processes, including processes to manufacture complementary metal- oxide-semiconductor (CMOS) logic, mixed-signal, radio frequency, embedded memory, bipolar CMOS mixed-signal, and others.
Read More - Current Price
- $197.21
- Consensus Rating
- Moderate Buy
- Ratings Breakdown
- 4 Buy Ratings, 1 Hold Ratings, 0 Sell Ratings.
- Consensus Price Target
- $214.00 (8.5% Upside)
#4 - Packaging Corporation of America (NYSE:PKG)
It's not the most exciting of stocks, but the Packaging Corporation of America (NYSE: PKG) may be ready to show investors that boring is beautiful. The company makes containerboard and corrugated packaging products in the United States.
The explosion of e-commerce has a downside of creating a need for packaging that has to be disposed of in one way or another. That is creating a need for sustainable solutions. And Packaging Corporation of America is a leader in creating sustainable solutions. And the company is also investing in technology that will help ensure the way it makes its packaging is as sustainable as the packaging itself.
PKG stock is up 32% in the last 12 months as the company has posted three straight quarters of better-than-expected earnings. Still, analysts have a consensus Hold rating on the stock. However, if the company meets or exceeds the 12% increase in earnings in the next 12 months, the price targets are likely to move higher, as will the stock price.
About Packaging Co. of America
Packaging Corporation of America manufactures and sells containerboard and corrugated packaging products in the United States. The company operates through three segments: Packaging, Paper, and Corporate and Other. The Packaging segment offers various containerboard and corrugated packaging products, such as conventional shipping containers used to protect and transport manufactured goods; multi-color boxes and displays that help to merchandise the packaged product in retail locations; and honeycomb protective packaging products, as well as packaging for meat, fresh fruit and vegetables, processed food, beverages, and other industrial and consumer products.
Read More - Current Price
- $227.98
- Consensus Rating
- Moderate Buy
- Ratings Breakdown
- 4 Buy Ratings, 3 Hold Ratings, 0 Sell Ratings.
- Consensus Price Target
- $231.33 (1.5% Upside)
#5 - Agilent Technologies (NYSE:A)
Agilent Technologies Inc. (NYSE: A) provides application-focused solutions to the life sciences, diagnostics, and applied chemical markets worldwide. This is a market that grew from approximately $4.7 billion in 2022 to approximately $5.07 billion in 2023. And the market is expected to grow at a compound annual growth rate (CAGR) of 8.1% to around $6.8 billion in 2027.
For its part, Agilent has a strategic agreement with PathAi in which Agilent will provide "an end-to-end solution for AI-powered assay development, including companion diagnostics enabled by digital pathology." This part of PathAI's precision medicine strategy which is likely to be one of the most investable themes in the next decade or more.
At 26x forward earnings, Agilent stock is expensive compared to the average of the S&P 500. And the company has been missing topline estimates from the prior year in the last four quarters. That may explain why analysts have a consensus Moderate Buy rating on A stock with a price target of $140.71. That would suggest that investors may want to wait for the stock to pull back.
About Agilent Technologies
Agilent Technologies, Inc provides application focused solutions to the life sciences, diagnostics, and applied chemical markets worldwide. The company operates in three segments: Life Sciences and Applied Markets, Diagnostics and Genomics, and Agilent CrossLab. The Life Sciences and Applied Markets segment offers liquid chromatography systems and components; liquid chromatography mass spectrometry systems; gas chromatography systems and components; gas chromatography mass spectrometry systems; inductively coupled plasma mass spectrometry instruments; atomic absorption instruments; microwave plasma-atomic emission spectrometry instruments; inductively coupled plasma optical emission spectrometry instruments; raman spectroscopy; cell analysis plate based assays; flow cytometer; real-time cell analyzer; cell imaging systems; microplate reader; laboratory software; information management and analytics; laboratory automation and robotic systems; dissolution testing; and vacuum pumps, and measurement technologies.
Read More - Current Price
- $134.51
- Consensus Rating
- Hold
- Ratings Breakdown
- 7 Buy Ratings, 6 Hold Ratings, 1 Sell Ratings.
- Consensus Price Target
- $143.62 (6.8% Upside)
#6 - Hillenbrand (NYSE:HI)
Hillenbrand Inc. (NYSE: HI) is a mid-cap company with just a 3.40 billion market cap. The company has transformed itself from its origins as a casket company into a global industrial company serving various industries. After selling off the casket business, the Batesville Casket Company, in 2022, Hillenbrand's business is divided into Advanced Process Solutions and Molding Technology Solutions.
This is a mature company that isn't going to deliver eye-popping revenue or earnings. However, what it may like in excitement, it makes up for in consistency. Year after year, the company has been delivering dividends to shareholders that have been increasing for 17 consecutive years and has a conservative payout ratio of just 11%.
HI stock has been rangebound for the last four years, which is consistent with the volatility in the manufacturing sector. The company's guidance in its February earnings report is conservative, but that could lead to an upside surprise in future quarters.
About Hillenbrand
Hillenbrand, Inc operates as an industrial company in the United States and internationally. The company operates through two segments, Advanced Process Solutions and Molding Technology Solutions. The Advanced Process Solutions segment designs, engineers, manufactures, markets, and services process and material handling equipment and systems comprising compounding, extrusion, and material handling equipment, equipment system design services, as well as offers mixing technology, ingredient automation, and portion process; and provides screening and separating equipment for various industries, including plastics, food and pharmaceuticals, chemicals, fertilizers, minerals, energy, wastewater treatment, forest products, and other general industrials.
Read More - Current Price
- $29.82
- Consensus Rating
- Moderate Buy
- Ratings Breakdown
- 1 Buy Ratings, 1 Hold Ratings, 0 Sell Ratings.
- Consensus Price Target
- $36.50 (22.4% Upside)
#7 - Steelcase (NYSE:SCS)
The last company on this list of manufacturing stocks to buy is Steelcase Inc. (NYSE: SCS). This small-cap company is well-known for high-end office furniture, and the Michigan-based company sells under various brand names.
Steelcase believes it is well-positioned to help businesses create the kind of office space that will attract employees to the office. However, the company wouldn't object to lower interest rates that could stimulate business spending.
The argument for Steelcase is that it's a small-cap company. Small-cap stocks were beaten down in 2022 and 2023 as these companies are more susceptible to higher interest rates. However, Steelcase paid down a significant amount of debt, which helped the balance sheet. To attest to that, Steelcase posted fiscal year 2023 earnings that were 127% higher than the prior year.
About Steelcase
Steelcase Inc provides a portfolio of furniture and architectural products and services in the United States and internationally. It operates through Americas and International segments. The company's furniture portfolio includes furniture systems, seating, storage, fixed and height-adjustable desks, benches, and tables, as well as complementary products, such as work accessories, lighting, mobile power, and screens.
Read More - Current Price
- $11.74
- Consensus Rating
- Buy
- Ratings Breakdown
- 2 Buy Ratings, 0 Hold Ratings, 0 Sell Ratings.
- Consensus Price Target
- $17.00 (44.8% Upside)
The ISM Manufacturing Index is the benchmark for the manufacturing industry. Every month, investors look at this reading for clues about the direction of the economy. Any reading above 50 indicates that manufacturing activity is expanding, while a reading below 50 indicates contraction.
On April 1, 2024, the index registered a 54.60, the strongest reading in 20 months. However, the March 2024 Jobs report showed manufacturing employment was unchanged. And the number of jobs was revised downward to a loss of 10,000 jobs in February.
MarketBeat provides a tool that allows investors to quickly find information on the top 35 manufacturing stocks at a particular time. Under the Stock Lists tab, you can look for Manufacturing Stocks under Stocks by Sector. This gives you a list of the top manufacturing stocks, including their current stock price, market cap, consensus analyst rating and consensus analyst price target.
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