We recently compiled a list of the 8 Best Plastics Stocks To Invest In Now. In this article, we are going to take a look at where Exxon Mobil Corporation (NYSE:XOM) stands against the other plastics stocks.
Key Trends and Challenges Facing the Plastics Industry
The importance of plastics in modern society cannot be overstated. They play a vital role in various industries, including automotive, construction, food and beverage, and healthcare. Plastics are lightweight, durable, and versatile, making them essential for the production of a wide array of products that enhance our daily lives.
Additionally, the plastics industry plays a crucial role in the global economy, contributing significantly to job creation and innovation. According to the Plastics Industry Association’s 2024 Size and Impact Report, the US plastics sector alone accounted for over 1 million jobs and generated $519.1 billion in shipments in 2023. This sector has shown resilience, with plastics manufacturing employment growing at a rate of 1.1% annually from 2013 to 2023, outpacing the overall manufacturing growth of 0.7% during the same period.
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Recent trends indicate a strong push towards sustainability within the plastics sector. Companies are increasingly investing in recycling technologies and circular economy initiatives to reduce waste and improve environmental outcomes. According to a report by The Business Research Company, the global plastic recycling market was valued at $41.71 billion in 2023. The market is expected to expand at a compound annual growth rate (CAGR) of 8.1% during 2024-2028 to reach a value of $61.56 billion by the end of the forecast period.
According to the United Nations Environment Programme (UNEP), the production of plastic has been increasing rapidly since the 1970s, outpacing the growth of any other material. Global plastic production could reach 1,100 million tonnes by 2050. A significant portion of this plastic, around 36%, is used for packaging, including single-use items like food and beverage containers. Unfortunately, about 85% of these single-use plastics end up in landfills or as unmanaged waste, contributing to a growing environmental crisis.
Demand for plastics is expected to remain high in the coming years. While limiting plastic production may seem beneficial for the environment, it could lead to unintended negative consequences for economies worldwide, particularly affecting those in developing regions that rely on affordable plastic products.
The plastics industry is not only vital for economic stability but also plays a crucial role in addressing modern sustainability challenges. With ongoing investments in recycling and innovation, the plastics industry is expected to continue to thrive while adapting to changing consumer preferences and regulatory landscapes.
Our Methodology
To compile our list of the 8 best plastics stocks to invest in now, we looked for the largest plastics companies. We also reviewed our own rankings and consulted various online resources to compile a list of the best plastics stocks.
From an initial pool of more than 20 plastics stocks, we focused on the top 8 stocks most favored by institutional investors. Data for the hedge fund sentiment surrounding each stock was taken from Insider Monkey’s Q3 2024 database of 900 elite hedge funds. The 8 best plastics stocks to invest in now are ranked in ascending order based on the number of hedge funds holding stakes in them as of Q3 2024.
Why do we care about what hedge funds do? 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).
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Exxon Mobil Corporation (NYSE:XOM)
Number of Hedge Fund Holders: 86
Exxon Mobil Corporation (NYSE:XOM) is an American multinational oil and gas corporation and one of the largest integrated fuels, lubricants, and chemical companies in the world. The company is also a major producer of a variety of advanced plastics, including polypropylene and polyethylene.
The company is making significant strides in the field of advanced recycling, which positions it as a promising investment opportunity for those interested in plastics. On November 21, 2024, Exxon Mobil Corporation (NYSE:XOM) announced a substantial investment of over $200 million to enhance its advanced recycling operations at its facilities in Baytown and Beaumont, Texas. This expansion will enhance the company’s ability to recycle hard-to-process plastics and divert them from landfills. The advanced recycling process transforms plastic waste into raw materials for various products, including fuels and high-performance plastics and chemicals. This method can handle types of plastic that traditional recycling cannot, helping to reduce waste and support a circular economy for plastics.
With this investment, Exxon Mobil Corporation (NYSE:XOM) will boost its annual recycling capacity to 500 million pounds, moving closer to its goal of reaching 1 billion pounds per year by 2027. Exxon Mobil (NYSE:XOM) is also developing additional recycling projects across North America, Europe, and Asia. The company has advanced recycling customers in over 15 countries across various sectors, such as food-safe packaging and pet food, where demand is growing.
Exxon Mobil Corporation (NYSE:XOM) is also advancing its technology-driven businesses, particularly with its innovative Proxxima thermoset resin. This new material is not only stronger and lighter than traditional options, but it also boasts superior corrosion resistance. Exxon Mobil (NYSE:XOM) estimates that the total addressable market for Proxxima could reach 5 million tons per year and a potential market value of $30 billion by 2030. Exxon Mobil Corporation’s (NYSE:XOM) strong market presence, combined with its strategic investments in advanced materials, positions it as a strong stock to consider for investors looking for growth in the plastics and materials sector.
Overall, XOM ranks 1st on our list of the best plastics stocks to invest in now. While we acknowledge the potential of XOM as an investment, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns, and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than XOM 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.