In this article, we will discuss the 9 best plastics and rubber stocks to buy. You can also check out the 15 Largest Plastic Manufacturing Companies in the World.
The global plastics and rubber products market is expected to observe consistent growth in the coming years. The market is expected to expand from $1.46 trillion in 2023 to $1.57 trillion in 2024, reflecting a healthy 7.3% annual growth rate. This positive trend is predicted to continue, with the market reaching a projected size of $2.05 trillion by 2028 at a 6.9% annual growth rate.
Several factors are fueling this growth, including the rise of manufacturing and advancements in the medical and healthcare sectors. The growing demand for tires in the automotive industry is also boosting the market. Tires, which are important for providing traction and supporting vehicle weight, depend significantly on rubber as a primary material.
For instance, a February 2023 report by the US Tire Manufacturers Association (USTMA) shared that tire shipments in the US are on an upward trajectory, rising from 332 million units in 2021 to 332.7 million units in 2022.
Recent trends in the US plastics and rubber product manufacturing sector highlight a rise in research and development (R&D) investment. Data collected by Source Advisors indicates a 19.4% increase in R&D compared to the previous year, signaling strong growth in innovation activities. The sector has invested a total of $3.1 billion in R&D, an increase from $2.6 billion the previous year. This rise in investment is double the US average for the same period.
This increase in R&D investment comes as a positive sign following a 5-year period characterized by a slump in innovation. During the slump, R&D investment in the industry declined by 16.2%. This trend has occurred in response to the evolving technological landscape and shifting consumer expectations, especially toward sustainable solutions.
Many popular companies have introduced innovative solutions through R&D efforts. For instance, Berry Global recently launched a new version of its Omni Xtra polyethylene (PE) cling film, specifically designed for fresh food applications. This innovative film serves as an alternative to traditional polyvinyl chloride (PVC) cling films and builds upon the success of the existing Omni Xtra film used in packaging various food products.
With this context in mind, let’s take a look at some of the best plastics and rubber stocks attracting investment currently.
A close-up of a factory worker handling advanced plastics materials with specialized machinery.
Our Methodology
For this article, we conducted an analysis of our database of 919 hedge funds as of Q1 2024. From this dataset, we selected the best plastics and rubber stocks based on the hedge fund sentiment. The top plastics and rubber stocks have been ranked in ascending order of the number of hedge funds holding a stake in them as of the first quarter of the year. Why are we interested in the stocks that hedge funds pile into? 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).
9 Best Plastics and Rubber Stocks to Buy
9. Silgan Holdings Inc. (NYSE:SLGN)
Number of Hedge Fund Holders: 23
Silgan Holdings (NYSE:SLGN) supplies rigid packaging solutions for essential consumer goods, prioritizing sustainability. It is a global manufacturer with facilities across four continents.
Silgan Holdings Inc. (NYSE:SLGN) reported its Q1 2024 results in May. The company’s sales dipped 7% year-over-year to $1.32 billion, due to lower volumes and pass-through of reduced costs of raw materials. The net income took a bit of a hit YoY as well, by 23%. This translated into diluted earnings per share of $0.52.
The management stays optimistic about Silgan Holdings Inc.’s (NYSE:SLGN) future prospects, reaffirming its 2024 guidance. The management projects adjusted net income per share to increase by 7%, reaching a range of $3.55 to $3.75. They also expect mid-single-digit growth in total adjusted EBIT and strong free cash flow of $375 million.
The stock has received positive feedback from analysts, earning a “Moderate Buy” consensus rating from 7 analysts. The average 12-month price target of $53 indicates a potential upside of over 20% from the current price levels.
Cardinal Capital is the leading hedge fund investor in the company, with a stake worth over $94.3 million as of Q1 2024. The company ranks ninth on our list of the best plastics and rubber stocks to invest in.
8. Westlake Corporation (NYSE:WLK)
Number of Hedge Fund Holders: 24
Westlake Corporation (NYSE:WLK) is a major player in the world of materials, specifically producing petrochemicals. These are the building blocks for many other chemicals, polymers, and fabricated building products.
In Q1 2024, Westlake Corporation’s (NYSE:WLK) net income slightly dipped year-over-year to $174 million, but it saw a significant rise compared to the previous quarter. This was due to increased sales volume driven by seasonal trends and strong demand for housing and infrastructure products.
Meanwhile, net sales reached $3 billion, and EBITDA was $546 million. The company has reaffirmed its 2024 guidance and projects a 7% growth in adjusted net income per diluted share.
Analysts are bullish on Westlake Corporation (NYSE:WLK) stock with a consensus rating of “Buy” from 17 experts. According to Michael Sison, from Wells Fargo & Company (NYSE:WFC), the stock continues to be a promising investment. Sison maintained a Buy rating on Westlake Corporation (NYSE:WLK) and set a price target of $180. The price target reflects an upside of over 19% from the current price levels.
At the end of Q1 2024, 24 hedge funds reported owning a stake in Westlake Corporation (NYSE:WLK), making it one of the best plastics and rubber stocks to buy in 2024.
7. AptarGroup Inc. (NYSE:ATR)
Number of Hedge Fund Holders: 30
AptarGroup Inc. (NYSE:ATR) is a world leader in designing and manufacturing technologies that control, dispense, and safeguard medications and everyday products. It serves a wide range of industries, from pharmaceuticals and cosmetics to food and cleaning supplies.
The company reported a strong start to 2024 with its Q1 2024 results. Sales grew 6% with core sales up 5%, while earnings per share jumped 50% to $1.23. Furthermore, adjusted earnings per share rose 31% to $1.26. Meanwhile, net income increased by 52% to $83 million, and adjusted EBITDA climbed 16% to $179 million. The dramatic rise in net income growth relative to sales growth can be attributed, in part, to efficient cost management and operational leverage improvements, which, the CEO Stephan B. Tanda says contributed to the decrease in (SG&A) expenses as a percentage of revenue relative to the previous year.
Analyst sentiment for AptarGroup’s fiscal 2024 earnings is positive, with estimates rising by 3.3% in the last 90 days. Analysts are bullish on AptarGroup’s long-term potential and have given the stock a Buy rating.
Out of the 919 hedge funds tracked by Insider Monkey, 30 reported owning stock in AptarGroup Inc. (NYSE:ATR) as of Q1 2024. Millennium Management was among the leading hedge fund investors in the company, with a stake worth over $54.9 million. The hedge fund increased its stake in the company by over 180% during the first quarter of the year.
6. Eastman Chemical Company (NYSE:EMN)
Number of Hedge Fund Holders: 33
Eastman Chemical Company (NYSE:EMN) is a prominent global specialty chemicals company with operations spanning various industries, including coatings, additives, and advanced materials. Headquartered in Kingsport, Tennessee, the company has a diverse portfolio of products and solutions to meet the needs of a wide range of end markets, from automotive to construction.
In Q1 2024, Eastman Chemical Company (NYSE:EMN) recorded a sequential rise in sales volume and earnings. This was due to the renewed demand for specialty products within its Advanced Materials and Additives & Functional Products divisions.
The company’s EBIT increased from $246 million in Q1 2023 to $263 million in Q1 2024. Meanwhile, earnings per diluted share increased from $1.12 in the first quarter of 2023 to $1.39 during Q1 2024.
Analysts’ price targets for the stock range from $94 to $128. The average price target of $109.3 implies an upside potential of over 10% from the current price levels. While some analysts suggest holding the stock, the majority (9 out of 18) have given it a “Buy” rating and 2 have given it a “Strong Buy” rating.
Here’s what ClearBridge Investments said about Eastman Chemical Company (NYSE:EMN) in its Q2 2023 investor letter:
“We also added a new position in Eastman Chemical Company (NYSE:EMN), a vertically integrated chemical company, reflecting an opportunity to buy an overly depressed cyclical stock with an extremely cheap option on molecular recycling. An eventual cyclical rebound alone is enough to justify a much higher business value as demand will accelerate as destocking ends, allowing Eastman to realize material profit margin expansion as it gets ahead of cost input inflation. Additionally, Eastman is ramping up three molecular recycling plants over the next few years based on its Polyester Renewal Technology, a less energy intensive and lower cost production process. This should drive faster growth while generating compelling returns on capital.”
5. The Goodyear Tire & Rubber Company (NASDAQ:GT)
Number of Hedge Fund Holders: 35
The Goodyear Tire & Rubber Company (NASDAQ:GT), a giant in the tire industry, employs over 71,000 people across 55 facilities in 22 countries. The company’s commitment to innovation is evident in its two global Innovation Centers, pushing the boundaries of tire technology and performance.
The company’s Q1 2024 results were released in May. As per the results, sales reached $4.5 billion, with tire unit volumes totaling 40.4 million. The Goodyear Tire & Rubber Company (NASDAQ:GT) recorded an increase of $122 million in segment operating income to reach $247 million in Q1 2024.
While the company reported a net loss of $57 million (20 cents per share), this represents a significant improvement compared to the $101 million loss (35 cents per share) in Q1 2023.
Morgan Stanley initiated coverage on The Goodyear Tire & Rubber Company (NASDAQ:GT), with an “Equal-Weight” rating and a $14 price target. Meanwhile, HSBC revised the price target to $15.90 and maintained a “Buy” rating. The overall analyst consensus leans towards a “Moderate Buy” with a price target of $17.23.
As of Q1 2024, 35 hedge funds reported owning a stake in The Goodyear Tire & Rubber Company (NASDAQ:GT).
4. Dow Inc. (NYSE:DOW)
Number of Hedge Fund Holders: 35
Dow Inc. (NYSE:DOW) is a leader in materials science, providing solutions for critical industries like packaging, infrastructure, transportation, and consumer goods. The company operates across 31 countries, employing a workforce of roughly 35,900 people.
In April, Dow Inc. (NYSE:DOW) announced its Q1 2024 results. GAAP EPS was reported at $0.73, while operating EPS, at $0.56, showed a slight year-over-year decline but an improvement from the previous quarter. Sales dropped 9% year-over-year, yet there was a positive note with a 1% sequential increase driven by Performance Materials & Coatings and Industrial Intermediates & Infrastructure. Overall volume increased by 1% year-over-year, with gains in most regions.
Furthermore, the company’s equity earnings totaled $17 million, marking a $65 million improvement from the same period last year and a $24 million sequential increase. This reflected gains across all of the company’s major joint ventures.
Analyst expectations for Dow Inc. (NYSE:DOW) are moderately bullish over the next year. On average, analysts predict a price target of $61.42 within the next 12 months, ranging from a low of $55 to a high of $68. This represents a potential upside of 9.31% from the current price levels.
As of Q1 2024, Dow Inc. (NYSE:DOW) stock was held by 35 hedge funds.
3. Carlisle Companies Incorporated (NYSE:CSL)
Number of Hedge Fund Holders: 36
Carlisle Companies Incorporated (NYSE:CSL) is a renowned provider of cutting-edge building envelope products and solutions that contribute to the creation of more energy-efficient buildings. The company operates through its two divisions: Carlisle Construction Materials (CCM) and Carlisle Weatherproofing Technologies (CWT), both of which specialize in delivering innovative and environmentally responsible products.
Carlisle Companies (NYSE:CSL) reported strong financial results for the first quarter of 2024. Earnings per share (EPS) jumped 85% year-over-year, with adjusted EPS reaching $3.72. Revenue also saw a significant increase of 23% year-over-year to $1.1 billion.
Looking ahead, the company raised its 2024 outlook, expecting revenue growth of around 10% and further margin expansion exceeding 100 basis points. Carlisle Companies (NYSE:CSL) has a history of exceeding expectations, beating EPS estimates for the past four quarters.
The average analyst price target for Carlisle Companies (NYSE:CSL) stock is $432. Analysts are confident, with the majority giving ratings of “Strong Buy” or “Buy” to the stock. The company ranks third on our list of the best plastics and rubber stocks to buy now.
Here’s what TimesSquare Capital Management said about Carlisle Companies (NYSE:CSL) in its Q4 2023 investor letter:
“In the Industrials sector we gravitate toward business service companies, those focused on automation & efficiency improvements, and essential infrastructure services. Carlisle Companies Incorporated (NYSE:CSL), a manufacturer of engineered products including roofing materials, rose 21%. While third quarter sales declined somewhat, operating margins improved. Management believes the destocking activity which persisted through the past few quarters is complete.”
2. LyondellBasell Industries NV (NYSE:LYB)
Number of Hedge Fund Holders: 40
LyondellBasell Industries NV (NYSE:LYB) is a global chemical manufacturing company with a presence across North America, Europe, Asia, and other international markets. The company specializes in producing a wide range of petrochemicals, plastics, and refined products used in various industries. These include packaging, automotive parts, construction materials, and consumer goods.
LyondellBasell Industries NV (NYSE:LYB) recently reported financial results for the first quarter of 2024. It reported a net income of $473 million, which was up from $185 million last quarter. Meanwhile, the company’s EPS of $1.53, surpassed the anticipated $1.37.
In 2023, the company’s volumes reached 123,000 tons. This was twice higher than the 2022 sales figures. The management is confident that this positive trend will continue as they strive to meet their 2030 objective of a minimum of 2 million tons per year.
Fifteen analysts have given LyondellBasell Industries NV (NYSE:LYB) a “Hold” rating, while five have recently reaffirmed their “Buy” recommendations. Among those recommending a “Buy” are Michael Sison from Wells Fargo and Bill Selesky from Argus Research. The average price target is $105.5, indicating a potential upside of over 10% from the current price.
1. Berry Global Group Inc. (NYSE:BERY)
Number of Hedge Fund Holders: 43
Berry Global Group Inc. (NYSE:BERY) is a leading manufacturer and supplier of a wide variety of plastic products used across numerous consumer and industrial applications. Its extensive portfolio includes rigid packaging solutions, nonwoven materials, and healthcare and hygiene products. Berry Global Group Inc. (NYSE:BERY) operates across the globe, serving customers in North America, Europe, Asia, and South America.
Berry Global Group Inc.’s (NYSE:BERY) Q2 2024 financial results met expectations. The company managed to work around extended weak macroeconomic demand and continued inflation in key raw materials at the start of fiscal 2024.
During the quarter, Berry Global Group Inc. (NYSE:BERY) also bought back 1.4 million shares amounting to $81 million. The company retained authorization to repurchase $354 million worth of shares by the end of the quarter.
Furthermore, Berry Global Group Inc. (NYSE:BERY) implemented structural improvements across its operations. The company raised its original cost savings target from $140 million to $165 million. The management anticipates a $55 million contribution from the program during this year and another $25 million in the next year.
Analysts are showing interest in the stock with a leaning toward a “Buy,” rating. The average price target of $72.8 reflects a potential upside of over 20% from the current price levels.
Here’s what Blue Tower Asset Management said about Berry Global Inc. (NYSE:BERY) in its Q1 2024 investor letter:
“On the other extreme are the “boring” companies. These companies are boring not because their products or services are necessarily boring. Rather, this refers to them being a stable, defensible company with limited potential upside. On average, these companies tend to be undervalued and give superior returns when compared with “lottery ticket” stocks. Companies that produce consumer staples that are insensitive to the market cycle are an example of these boring, low volatility companies. Low volatility stock returns tend to be higher than high volatility stock returns even though we would expect the opposite from the efficient market hypothesis6. An example of a company that fits this model from our portfolio is the plastics manufacturer, Berry Global Group, Inc. (NYSE:BERY). Berry is the low-cost producer of plastic packaging in the United States. As the dominant, mature company in a slow-growth industry, there is relatively little chance of a dramatic short-term growth in the company’s stock. However, the company trades at a very cheap valuation and has been steadily profitable and growing over the past decade. With our expectations for its forward rate of return, we believe Berry makes a great contribution to the portfolio even if it may be “boring”.”
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