We recently compiled a list of the 9 Best Plastics and Rubber Stocks to Buy. In this article, we are going to take a look at where Dow Inc. (NYSE:DOW) stands against the other plastic and rubber stocks.
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.
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).
A technician operating state of the art machines manufacturing specialized packaging materials.
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.
Overall DOW ranks 4th on our list of the best plastic and rubber stocks to buy. You can visit 9 Best Plastics and Rubber Stocks to Buyto see the other plastic and rubber stocks that are on hedge funds’ radar. While we acknowledge the potential of DOW 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 timeframe. If you are looking for an AI stock that is more promising than DOW but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
