11 Best Conglomerate Stocks to Buy Now

In this article, we will take a look at the 11 best conglomerate stocks to buy now.

Conglomerates are corporations that own and operate multiple diverse businesses, encompassing industries such as manufacturing, finance, technology, energy, retail, and entertainment. These companies acquire subsidiaries through mergers and acquisitions to expand their operations and diversify revenue streams.

Investing in conglomerates provides a unique advantage by offering exposure to various sectors under one umbrella. By leveraging synergies between subsidiaries, conglomerates generate efficiencies, unlock new revenue streams, and navigate economic cycles more effectively. This inherent diversification reduces the impact of industry-specific risks and provides stability amid market volatility.

Portfolio Manager Expects More Volatility Ahead

On April 26 PIMCO’s portfolio manager, Erin Browne, appeared in an interview on CNBC where she discussed the current market environment and her market outlook. According to Browne, the market is not accurately priced for what lies ahead in the economy. She pointed out that the market is still positive, with the S&P trading near 4,100, up roughly 6.25% on a year-to-date basis. Browne thinks that that there is not a widespread sentiment of panic or concern among investors since valuations remain relatively high, trading at around 18.5 times forward earnings. Browne thinks that volatility is likely to rise in the back half of 2023, due to the presence of significant risks that are not adequately priced into the market. Here is what she said:

“As we start to see debt ceiling really come front and center and discussed in the market, as you start to see the economy roll even harder, I do think that volatility sub-20 is pretty remarkable. And I would expect to see that you would be trading in a more normalized 20 to 30 range over the course of the next six months or so. So from here, I would be betting on volatility moving higher. There’s a lot of risk on the horizon, and the market’s really not priced for that risk.”

An area of the market that Erin Browne is particularly bullish on right now is large-cap banks. She thinks that the “globally systemically important banks” will benefit from the weakness in deposit flows and lending in small banks, since they will be able to “step in and take advantage of dislocations in the market” by purchasing assets that small banks are offloading. Erin thinks that large banks will drive outperformance in the medium to long term, even if they experience short-term losses. She suggests that investing in large-cap banks right now can lead to long-term benefits due to capital outflows from smaller banks and opportunities for asset acquisitions.

Conglomerate stocks can be an appealing option for investors seeking diversification and resilience. With their diverse range of business operations, spanning multiple industries, conglomerates can mitigate risks associated with individual sectors and provide a cushion against potential downturns. Some of the best conglomerate stocks to buy now according to hedge funds include Berkshire Hathaway Inc. (NYSE:BRK-B), Honeywell International Inc. (NYSE:HON), and 3M Company (NYSE:MMM). Let’s now discuss these stocks, among others, in detail below.

Photo by Austin Distel on Unsplash

Our Methodology

We used Yahoo Finance’s stock screener to screen for companies that belong to the conglomerates industry and also scoured the internet to find companies with diverse business operations. We sourced each stock’s hedge fund sentiment from Insider Monkey’s database, which keeps track of 943 institutional investors as of Q4 2022. We narrowed down our selection to stocks that were the most widely held by hedge funds. These stocks are ranked in ascending order of the number of hedge funds that have stakes in them.

 Best Conglomerate Stocks to Buy Now

11. Tejon Ranch Company (NYSE:TRC)

Number of Hedge Fund Holders: 9

Tejon Ranch Company (NYSE:TRC) is involved in real estate development and agribusiness. The company has five business segments: Commercial/Industrial Real Estate Development, Resort/Residential Real Estate Development, Mineral Resources, Farming, and Ranch Operations.

On March 8, Tejon Ranch Company (NYSE:TRC) posted earnings for the fiscal fourth quarter of 2022. The company reported an EPS of $0.07 and outperformed EPS estimates by $0.06. The company’s revenue for the quarter amounted to $17.45 million, up 34.68% year over year and ahead of Wall Street consensus by $5.42 million. Tejon Ranch Company (NYSE:TRC) is one of the best conglomerate stocks to buy now, according to hedge funds.

Tejon Ranch Company (NYSE:TRC) was spotted on 9 hedge funds’ portfolios at the close of Q4 2022 that disclosed collective stakes worth $50.9 million in the company. As of December 31, Horizon Asset Management is the most prominent shareholder in the company and has a position worth $19 million.

Some of hedge funds’ top conglomerate stock picks include Griffon Corporation (NYSE:GFF), Honeywell International Inc. (NYSE:HON), and 3M Company (NYSE:MMM).

10. Seaboard Corporation (NYSE:SEB)

Number of Hedge Fund Holders: 15

Seaboard Corporation is a global company that operates in the agriculture and transportation businesses. The company has six distinct segments: Pork, Commodity Trading & Milling, Marine, Sugar & Alcohol, Power, and Turkey. Seaboard Corporation (NYSE:SEB) is placed tenth among the best conglomerate stocks to buy now according to hedge funds.

Seaboard Corporation (NYSE:SEB) is on the rise and is trading at a compelling PE multiple. As of April 28, the stock is trading at a PE multiple of 7x and has gained 7.24% year to date.

15 hedge funds disclosed having stakes in Seaboard Corporation (NYSE:SEB) at the end of Q4 2022. The total value of these stakes amounted to $98.7 million. As of December 31, Kahn Brothers is the largest stockholder and has a stake worth $37.5 million.

9. Mammoth Energy Services, Inc. (NASDAQ:TUSK)

Number of Hedge Fund Holders: 15

Mammoth Energy Services, Inc. (NASDAQ:TUSK) is an American energy services company. The company does business through four segments: Infrastructure Services, Well Completion Services, Natural Sand Proppant Services, and Drilling Services.

On April 27, Mammoth Energy Services, Inc. (NASDAQ:TUSK) announced strong earnings for the fiscal first quarter of 2023. The company reported an EPS of $0.17 and outperformed EPS expectations by $0.23. The company generated a revenue of $116.32 million and beat Wall Street consensus by $4.75 million.

On April 20, EF Hutton started coverage of Mammoth Energy Services, Inc. (NASDAQ:TUSK) with a Buy rating and a $7 price target. As of April 28, the stock has returned 69.27% to investors over the past 12 months. Mammoth Energy Services, Inc. (NASDAQ:TUSK) is one of the best conglomerate stocks to buy now.

Mammoth Energy Services, Inc. (NASDAQ:TUSK) was a part of 15 investors’ portfolios at the close of the fourth quarter of 2022. These funds disclosed positions worth $275 million in the company. As of December 31, Wexford Capital is the top investor and holds a position worth $194 million.

8. Matthews International Corporation (NASDAQ:MATW)

Number of Hedge Fund Holders: 16

Matthews International Corporation (NASDAQ:MATW) is an American provider of brand solutions, memorialization products, and industrial technologies. The company has three business divisions: Memorialization, Industrial Technologies, and SGK Brand Solutions. As of April 28, the stock has gained 40.89% over the past 6 months and is offering a forward dividend yield of 2.54%. The stock is placed eighth on our list of the best conglomerate stocks to buy now.

On April 27, Matthews International Corporation (NASDAQ:MATW) released earnings for the second quarter of fiscal 2023. The company generated a revenue of $479.58 million, up 7.78% year over year and ahead of market consensus by $29.09 million. The company reported earnings per share of $0.65 and beat EPS estimates by $0.14.

Matthews International Corporation (NASDAQ:MATW) was held by 16 hedge funds at the close of Q4 2022. These funds held positions worth $65 million in the company. As of December 31, GAMCO Investors is the dominant shareholder in the company and has disclosed a stake worth $33.6 million.

7. Veritiv Corporation (NYSE:VRTV)

Number of Hedge Fund Holders: 21

Veritiv Corporation (NYSE:VRTV) is an American B2B provider, specializing in supplying packaging, publishing, and hygiene products to businesses in the U.S. and across the globe. The company has three segments: Packaging, Facility Solutions, and Print.

On March 14, BofA analyst George Staphos raised his price target on Veritiv Corporation (NYSE:VRTV) to $162 from $150 and reiterated a Buy rating on the shares.

Veritiv Corporation (NYSE:VRTV) is one of the best conglomerate stocks to buy now according to hedge funds. As of April 28, the stock is trading at a PE multiple of 4.97 and is offering a forward dividend yield of 2.10%.

At the close of Q4 2022, 21 hedge funds were long Veritiv Corporation (NYSE:VRTV) and held stakes worth $490 million in the company. Of those, CastleKnight Management was the leading investor in the company and disclosed a position worth $11 million.

In addition to Veritiv Corporation (NYSE:VRTV), other conglomerate stocks that are on the radars of hedge funds and analysts include Berkshire Hathaway Inc. (NYSE:BRK-B), Honeywell International Inc. (NYSE:HON), and 3M Company (NYSE:MMM).

6. Valmont Industries, Inc. (NYSE:VMI) 

Number of Hedge Fund Holders: 23

Valmont Industries, Inc. (NYSE:VMI) is a global provider of metal products. The company has two business segments: Infrastructure and Agriculture. This April, Stifel revised its price target on Valmont Industries, Inc. (NYSE:VMI) to $352 from $389 and reiterated a Buy rating on the shares.

On April 20, Valmont Industries, Inc. (NYSE:VMI) reported earnings for the first quarter of fiscal 2023. The company reported an EPS of $3.61 and outperformed EPS estimates by $0.23. The company’s revenue for the quarter amounted to $1.06 billion, up 8.33% year over year, and beat Wall Street estimates by $25.62 million.

As of April 28, Valmont Industries, Inc. (NYSE:VMI) industries has returned 15.67% to investors over the past 12 months and is offering a forward dividend yield of 0.83%. The stock is placed sixth among the best conglomerate stocks to buy now, according to hedge funds.

At the end of the fourth quarter of 2022, 23 hedge funds were eager on Valmont Industries, Inc. (NYSE:VMI)  and disclosed positions worth $572 million in the company. Of those, Impax Asset Management was the largest stockholder and held a position worth $197 million.

5. MDU Resources Group, Inc. (NYSE:MDU)

Number of Hedge Fund Holders: 27

MDU Resources Group, Inc. (NYSE:MDU) is involved in various sectors within the United States, including regulated energy delivery, construction materials, and services. The company has five distinct divisions: Electric, Natural Gas Distribution, Pipeline, Construction Materials & Contracting, and Construction Services. MDU Resources Group, Inc. (NYSE:MDU) is one of the best conglomerate stocks to buy now and has gained 13.61% over the past 12 months, as of April 28.

As of March 2023, MDU Resources Group, Inc. (NYSE:MDU) has 2 Buy ratings and 2 Hold ratings from Wall Street analysts. The stock has an average price target of $33.50, which implies an upside of 14.73% from current levels.

27 hedge funds held stakes in MDU Resources Group, Inc. (NYSE:MDU) at the close of Q4 2022. The total value of these stakes amounted to $579 million. As of December 31, Corvex Capital is the top investor in the company and has a stake worth $307 million.

4. Griffon Corporation (NYSE:GFF)

Number of Hedge Fund Holders: 28

Griffon Corporation (NYSE:GFF) is a leading global conglomerate that operates through three segments: Telephonics, Building Products, and Plastics. Griffon Corporation (NYSE:GFF) was spotted on 28 hedge funds’ portfolios at the close of Q4 2022. These funds disclosed positions worth $295 million in the company. As of December 31, Voss Capital is the most prominent shareholder and has a stake worth $103 million.

On April 20, Griffon Corporation (NYSE:GFF) announced a special cash dividend of $2.00 per share. The dividend is payable on May 19 to stockholders of record at the close of business on May 9. As of April 28, the stock is offering a forward dividend yield of 1.44% and has gained 26.84% over the past 12 months. Griffon Corporation (NYSE:GFF) is ranked fourth on our list of the best conglomerate stocks to buy now.

Greystone Capital Management made the following comment about Griffon Corporation (NYSE:GFF) in its Q4 2022 investor letter:

“Last quarter I wrote about a new position in a small cap consumer products business that manufactures tools and home improvement items as well as residential and commercial garage doors. The company is Griffon Corporation (NYSE:GFF), and is one of our top five positions heading into 2023. This is an attractive situation for several reasons, but mostly due to the strength of Griffon’s Home and Building Products segment and the significant corporate governance improvements recently enacted.

Griffon Corp. is made up of two business segments, Consumer and Professional Products (‘CPP’) and Home and Building Products (‘HBP’). CPP manufactures popular home accessories and garden tools through quality brand names such as ClosetMaid and Ames. HBP is one of the leading manufacturers in the US of residential garage doors and rolling steel doors, with a nearly 50% market share through their Clopay and CornellCookson brands. CPP has struggled under the weight of poor acquisitions, lack of cohesiveness and underinvestment, but possesses strong market share in garden tools and has typically done well through various business cycles. Griffon’s HBP segment has cockroach-like elements, with a history of strong organic growth and resilience over multiple decades. Today, Clopay and CornellCookson are responsible for nearly half of Griffon’s revenue and around 60% of EBITDA. Given their strong characteristics of resiliency, cash flows and returns on capital, these businesses make great acquisition candidates and recent industry consolidation adds a valuable element to the mix. Valuing HBP using an EBITDA multiple in line with similar businesses as well as recent transaction comps reflects a per share price that could exceed Griffon’s current enterprise value…” (Click here to read the full text)

3. Honeywell International Inc. (NYSE:HON)

Number of Hedge Fund Holders: 44

On April 27, Honeywell International Inc. (NYSE:HON) reported strong earnings for the fiscal first quarter of 2023. The company generated a revenue of $8.86 billion, up 5.83% year over year, and outperformed market expectations by $349.90 million. The company reported earnings per share of $2.07 and beat EPS estimates by $0.14.

Shortly after the company’s earnings release, Citi analyst Andrew Kaplowitz raised his price target on Honeywell International Inc. (NYSE:HON) to $242 from $240 and maintained a Buy rating on the shares. Honeywell International Inc. (NYSE:HON) is one of the best conglomerate stocks to buy now, according to hedge funds.

Honeywell International Inc. (NYSE:HON) was held by 44 hedge funds at the end of Q4 2022 that disclosed stakes worth $697 million in the company. Of those, Diamond Hill Capital was the top stockholder and held a stake worth $245 million.

2. 3M Company (NYSE:MMM)

Number of Hedge Fund Holders: 52

3M Company (NYSE:MMM) was a part of 52 investors’ portfolios at the close of the fourth quarter of 2022. These funds held positions worth $1.5 billion in the company. As of December 31, AQR Capital Management is the leading shareholder in the company and has a stake worth $220 million. 3M Company (NYSE:MMM) is placed second on our list of best conglomerate stock to buy now according to hedge funds.

As of March 2023, 3M Company (NYSE:MMM) has 15 Hold ratings from Wall Street analysts and an average price target of $110. The stock’s average price target represents an upside of 3.56% from current levels. As of April 28, 3M Company (NYSE:MMM) is trading at a PE multiple of 10.97 and is offering a forward dividend yield of 5.65%.

On April 25, 3M Company (NYSE:MMM) posted market-beating earnings for the first quarter of fiscal 2023. The company reported an EPS of $1.97 and beat EPS expectations by $0.37. The company generated a revenue of $8.03 billion and outperformed market consensus by $517.3 million.

1. Berkshire Hathaway Inc. (NYSE:BRK-B)

Number of Hedge Fund Holders: 110

Berkshire Hathaway Inc. (NYSE:BRK-B) is a renowned conglomerate and investment company led by Warren Buffett, widely considered one of the most successful investors of all time. Berkshire Hathaway Inc. (NYSE:BRK-B) has a diverse portfolio of businesses across various sectors, including insurance, utilities, manufacturing, transportation, and more.

As of April 2023, Berkshire Hathaway Inc. (NYSE:BRK-B) has 1 Buy rating, 1 Outperform rating, and 4 Hold ratings from Wall Street analysts. The stock has an average price target of $367.26, which implies an upside of 12.72% from current levels. Berkshire Hathaway Inc. (NYSE:BRK-B) is one of the best conglomerate stocks to buy now, according to hedge funds.

110 hedge funds held stakes in Berkshire Hathaway Inc. (NYSE:BRK-B) at the end of Q4 2022. The total value of these stakes amounted to $15.7 billion. As of December 31, Bill & Melinda Gates Foundation Trust is the top investor in the company and has a stake worth $7.6 billion.

Insider Monkey focuses on uncovering the best investment ideas of hedge funds and insiders. Please subscribe to our free daily enewsletter to get the latest investment ideas from hedge funds’ investor letters by entering your email address below. You can also take a look at 12 Gene Editing Stocks With the Best Long-Term Potential and 10 Best Asset Management Stocks To Buy.

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Disclosure: None. 11 Best Conglomerate Stocks to Buy Now is originally published on Insider Monkey.