In this piece, we will take a look at the 14 most undervalued industrial stocks to buy according to hedge funds. If you want to skip our overview of the industrial sector and some recent developments, then take a look at 5 Most Undervalued Industrial Stocks To Buy According To Hedge Funds.
If there’s one thing that can be said with certainty, it’s that the industrial segment is responsible for today’s technological and civilizational advances. Whether it’s mass produced consumer products such as toothpaste and deodorants, or airplanes and cars, industrial mass production has rapidly transformed humanity’s standard of living in just a couple of decades.
In the 21st century, even though most investor and media attention is focused on lucrative technology companies, industrial firms remain at the center of global prosperity and advancements. For instance, one of the most well known industrial companies in the world is the American manufacturing giant General Electric Company (NYSE:GE). General Electric was set up in 1892 and it is responsible for making some of the most advanced technological products in the world. Two of General Electric’s most important business divisions are the aerospace and energy businesses. The GE Aerospace business division is one of the few jet engine manufacturers in the world. Its products are used by big ticket firms such as The Boeing Company (NYSE:BA), and often prove to be indispensable when it comes to alternatives. Similarly, the GE Power division is one of the handful of power turbine companies in the world, and one that is also capable of manufacturing products for nuclear power plants.
Another big ticket industrial name is Boeing. Boeing is the only company apart from Airbus that makes commercial jets in the Western world, with some of its biggest products capable of flying hundreds of people all over the world. Additionally, Boeing is also one of the world’s leading technology companies when it comes to aerospace and astronautics. Its aircraft such as the F-15EX fighter planes are among the most advanced in the world and are used by the world’s leading military powers such as the U.S. Air Force. Similarly, Boeing is NASA’s primary manufacturing partner for the space agency’s Artemis program.
NASA Artemis plans to place humans on the Moon once again after the Apollo program, and the Boeing built Space Launch System (SLS) rocket successfully sent the Orion spacecraft to a lunar orbit last year as part of NASA’s first Artemis test flight. The SLS is also the world’s most powerful operational rocket, and it uses solid rocket boosters manufactured by the industrial company Northrop Grumman Corporation (NYSE:NOC) and engines made by the L3Harris Technologies, Inc. (NYSE:LHX) subsidiary Aerojet Rocketdyne.
Nuclear power, jet engines, and rockets are the leading demonstrators of humanity’s 2023 technological advancements over people living just a century back. The fact that the industrial segment is responsible for making all these products ensures that this segment is indispensable to our progress. At the same time, the sector is also relatively insulated against competition. After all, Aerojet and SpaceX are the only two operational rocket engine manufacturers in America, Boeing and Airbus SE (EPA:AIR.PA) are the only ones making passenger planes in the Western world, and Northrop, Boeing, and Lockheed Martin Corporation (NYSE:LMT) are the only ones that provide fighter aircraft to the Pentagon.
This is simply due to the high capital expenditure involved in setting up these companies, and the technologically complex products mean that new entrants often spend decades before a final product is ready. One of the most recent examples of this phenomenon in the industrial segment is Jeff Bezos’s rocket company Blue Origin, whose BE engine lineup has been developed for years and should make its first flight in December 2023.
So, if you’re wondering about what undervalued industrial stocks might be ripe for entry and are being bought by hedge funds, you’re in the right place. Some top stocks are United Airlines Holdings, Inc. (NASDAQ:UAL), Hertz Global Holdings, Inc. (NASDAQ:HTZ), and American Airlines Group Inc. (NASDAQ:AAL).
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Our Methodology
To compile our list of the most undervalued industrial stocks that hedge funds are buying, we first made a list of 30 industrial companies with the lowest price to trailing earnings ratio. Then, those with the greatest number of hedge funds in Q3 2023 were selected as the most undervalued industrial stocks.
Most Undervalued Industrial Stocks To Buy According To Hedge Funds
14. Safe Bulkers, Inc. (NYSE:SB)
Number of Hedge Fund Investors In Q3 2023: 9
Latest P/E Ratio: 5.54
Safe Bulkers, Inc. (NYSE:SB) is a Monaco based dry bulk shipping company. Like some other shipping companies, it has also spent 2023 selling some of its ships with the first sale taking place in November 2023.
As September 2023 ended, nine among the 910 hedge funds tracked by Insider Monkey had held a stake in Safe Bulkers, Inc. (NYSE:SB). The firm’s largest investor in our database is Jim Simons’ Renaissance Technologies as it owns 3.4 million shares that are worth $11 million.
Along with Hertz Global Holdings, Inc. (NASDAQ:HTZ), United Airlines Holdings, Inc. (NASDAQ:UAL), and American Airlines Group Inc. (NASDAQ:AAL), Safe Bulkers, Inc. (NYSE:SB) is a highly undervalued stock to buy according to hedge funds.
13. Costamare Inc. (NYSE:CMRE)
Number of Hedge Fund Investors In Q3 2023: 10
Latest P/E Ratio: 2.63
Costamare Inc. (NYSE:CMRE) is a Monaco based ocean logistics firm with more than a hundred ships in its fleet. It has been busy expanding its fleet in 2023 and has added three new ships so far.
Insider Monkey dug through 910 hedge funds for their third quarter of 2023 investments and found that ten had invested in the company. Costamare Inc. (NYSE:CMRE)’s largest hedge fund shareholder is Jim Simons’ Renaissance Technologies due to its $16.1 million investment.
12. Danaos Corporation (NYSE:DAC)
Number of Hedge Fund Investors In Q3 2023: 10
Latest P/E Ratio: 2.40
Danaos Corporation (NYSE:DAC) is a sizeable container ship company headquartered in Greece. The firm’s shares are rated Buy on average and analysts have set an average share price target of $78.50.
By Q3 2023 end, ten out of the 910 hedge funds polled by Insider Monkey were Danaos Corporation (NYSE:DAC)’s investors. Peter Rathjens, Bruce Clarke, and John Campbell’s Arrowstreet Capital owned the biggest stake among these which is worth $18.2 million.
11. StealthGas Inc. (NASDAQ:GASS)
Number of Hedge Fund Investors In Q3 2023: 11
Latest P/E Ratio: 6.31
StealthGas Inc. (NASDAQ:GASS) is a Greek petroleum products shipping company. The firm has beaten analyst EPS estimates in all four of its latest quarters and its year to September results saw it set a new net income record by posting $43 million in the segment.
Insider Monkey’s September quarter of 2023 survey covering 910 hedge funds revealed that 11 had invested in the firm. StealthGas Inc. (NASDAQ:GASS)’s largest hedge fund investor is Matthew Barrett’s Glendon Capital Management due to its $29.7 million stake.
10. Eastman Kodak Company (NYSE:KODK)
Number of Hedge Fund Investors In Q3 2023: 12
Latest P/E Ratio: 5.58
Eastman Kodak Company (NYSE:KODK) is an iconic American firm known for having invented the Polaroid camera. Since they started trading on the stock market in 2013, the shares have lost more than 84%. Surprisingly though, in 2023, they are up by 23% year to date.
During Q3 2023, 12 out of the 910 hedge funds part of Insider Monkey’s database had bought and owned Eastman Kodak Company (NYSE:KODK)’s shares. Thomas E. Claugus’s GMT Capital was the largest investor among these due to its $4.1 million stake.
9. Global Ship Lease, Inc. (NYSE:GSL)
Number of Hedge Fund Investors In Q3 2023: 14
Latest P/E Ratio: 2.16
Global Ship Lease, Inc. (NYSE:GSL) is a British container ship company headquartered in London, the United Kingdom. Like other firms, it is benefiting from easing global supply chains and has beaten analyst EPS estimates in all four of its latest quarters.
During this year’s third quarter, 14 out of the 910 hedge funds polled by Insider Monkey had held a stake in the company. Global Ship Lease, Inc. (NYSE:GSL)’s biggest hedge fund investor is David Salanic’s Whitefort Capital as it owns 1.7 million shares that are worth $31.3 million.
8. Ardmore Shipping Corporation (NYSE:ASC)
Number of Hedge Fund Investors In Q3 2023: 15
Latest P/E Ratio: 4.15
Ardmore Shipping Corporation (NYSE:ASC) is a Bermuda based chemicals and petroleum shipping company. Its shares are rated Strong Buy on average and analysts have set an average share price target of $18.60.
As of Q3 2023 end, 15 out of the 910 hedge funds covered by Insider Monkey research had bought Ardmore Shipping Corporation (NYSE:ASC)’s shares. Out of these, Peter Rathjens, Bruce Clarke, and John Campbell’s Arrowstreet Capital was the largest shareholder since it owned 809,499 shares that are worth $10.5 million.
7. Wabash National Corporation (NYSE:WNC)
Number of Hedge Fund Investors In Q3 2023: 19
Latest P/E Ratio: 4.78
Wabash National Corporation (NYSE:WNC) is a heavy duty industrial equipment manufacturer that sells storage tanks, truck bodies, and associated products. It is currently targeting the lucrative electronic commerce industry and it announced a new joint venture built on adding A.I. capabilities to logistics networks in November 2023 to deepen its presence in the market.
Insider Monkey dug through 910 hedge fund holdings and found that 19 had invested in the firm during 2023’s September quarter. Wabash National Corporation (NYSE:WNC)’s biggest hedge fund investor during the time period was Richard Driehaus’s Driehaus Capital since it owned $18.6 million worth of shares.
6. Titan Machinery Inc. (NASDAQ:TITN)
Number of Hedge Fund Investors In Q3 2023: 24
Latest P/E Ratio: 5.07
Titan Machinery Inc. (NASDAQ:TITN) makes and sells agricultural and construction machinery in the U.S. and in Europe. The firm has beaten analyst EPS estimates in three out of its four latest quarters and the shares are rated Strong Buy on average.
As of Q3 2023 end, 24 out of the 910 hedge funds profiled by Insider Monkey were Titan Machinery Inc. (NASDAQ:TITN)’s investors. Richard S. Meisenberg’s CK Asset Management held the largest stake among these which was worth $17.5 million.
United Airlines Holdings, Inc. (NASDAQ:UAL), Titan Machinery Inc. (NASDAQ:TITN), Hertz Global Holdings, Inc. (NASDAQ:HTZ), and American Airlines Group Inc. (NASDAQ:AAL) are some of the most undervalued stocks to buy according to hedge funds.
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Disclosure: None. 14 Most Undervalued Industrial Stocks To Buy According To Hedge Funds is originally published on Insider Monkey.