Does Carlisle Companies Incorporated (CSL)’s Strong Financial Performance Make It a Good Buy?

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 Carlisle Companies Incorporated (NYSE:CSL) 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 close-up of a technician assembling a complex wiring harness for a building product.

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.”

Overall CSL ranks 3rd on our list of the best plastic and rubber stocks to buy. You can visit 9 Best Plastics and Rubber Stocks to Buy to see the other plastic and rubber stocks that are on hedge funds’ radar. While we acknowledge the potential of CSL 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 CSL 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.