Manufacturing remains a big part of America’s economy. The U.S. today is the second largest manufacturer in the world after China. According to data from The National Association of Manufacturers, the manufacturing sector accounts for 10% of U.S. gross domestic product (GDP), employs 13 million people, and generates $1.6 trillion a year through exports of manufactured goods to other parts of the world.
Americans employed in the manufacturing sector earn an average annual salary of $98,846 and 93% of them have access to healthcare benefits through their employer. More than half (53%) of all private sector research and development (R&D) spending in the U.S. occurs in the manufacturing sector. And despite perceptions that manufacturing is in decline, projections are that four million net new jobs within the industry will be created by 2030.
With its economic importance in mind, we offer the top three manufacturing stocks to buy in March 2024.
General Electric (GE)
General Electric (NYSE:GE) is staging one of the great American comebacks. After languishing for more than a decade and being labeled a “value trap” by many analysts, GE stock has caught fire once again. The conglomerate that manufactures everything from airplane engines to wind turbines has seen its share price rise 85% in the last 12 months, including a 28% gain so far in 2024. Its quite a turnaround for a company and stock that many people had written off.
The resurrection of GE stock comes as the company continues to break itself into separate publicly traded businesses. General Electric completed the separation of its healthcare business last year and plans to spinoff its energy business into a separate company this April. The break-up appears to be helping.
General Electric recently reported fourth quarter 2023 financial results that beat estimates, announcing earnings of $1.03 per share, which was higher than the 91 cents expected by analysts. Revenue rose 15% to $19.42 billion, beating forecasts of $17.67 billion. Demand remains strong in its jet engine segment.
Alcoa (AA)
Investors looking for a buy-the-dip candidate should consider U.S. aluminum giant Alcoa (NYSE:AA). While the Pittsburgh-based manufacturer’s stock has struggled in recent years, things are looking up with its recently announced offer to buy rival Australian aluminum producer Alumina (OTC:AWCMY) for $2.21 billion. Alcoa says that the acquisition will increase its share of the global markets for both alumina and bauxite. Alcoa already has a partnership in place with Alumina.
Alcoa is buying Alumina in an all-stock deal. Alumina’s board of directors has recommended that its shareholders support the friendly takeover. The acquisition will give Alumina greater access to both alumina and bauxite, the key ingredients used in the manufacture of the metal aluminum, which is in demand as the world transitions away from fossil fuels.
The Alumina takeover comes as AA stock has declined nearly 50% over the last 12 months, making the shares look cheap at current levels.
Taiwan Semiconductor Manufacturing Co. (TSM)
Now for a technology manufacturer. Taiwan Semiconductor Manufacturing Co. (NYSE:TSM) is the world’s largest manufacturer of microchips and semiconductors. By most accounts, TSMC, as the company is known, makes three-quarters (75%) of all the microchips in the world. Chips that are used to power everything from artificial intelligence chatbots to refrigerators and cars. The company’s strategic importance to the global economy cannot be understated.
Given the demand for microchips, which is largely being fueled by AI, TSM stock is having a moment. Year-to-date, the company’s share price is up 36%. Through 12 months, the stock has risen 54%. This as TSMC expands beyond its home market of Taiwan. The company just opened its first microchip plant in Japan, a 45,000 square meter, state-of-the-art manufacturing center.
TSMC is also building two new fabrication plants in Arizona at a cost of $40 billion that’s aimed at meeting America’s microchip demand.
On the date of publication, Joel Baglole did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
