The 3 Best Manufacturing Stocks to Buy Now: September 2023

Source: elenabsl/Shutterstock

Though manufacturing activity has moved geographically from the West to the East in recent history, the sector continues to play a vital role in the global economy, providing goods and services that meet the desires of consumers and businesses. However, manufacturing has also seen changes such as technological innovations and renewed geopolitical rivalries. Investors should be privy to these wider transformations and take advantage of them by picking the best performing manufacturing stocks in the market.

The below manufacturing stocks should be considered in September 2023 due to attractive growth prospects, competitive advantages and strong financial performance.

Li Auto (LI)

As the name suggests, Li Auto’s (NASDAQ:LI) is a manufacturing company that designs, constructs and delivers vehicles. In particular, Li Auto is one of leading electric vehicle (EV) manufacturers in China that focuses on producing smart SUVs with extended-range technology. The company’s flagship model is the Li L7, a five-seater premium SUV that can run on both electricity and gasoline and competes directly with Tesla’s (NASDAQ:TSLA) Model Y.

Li Auto has been growing rapidly in recent years, as it benefits from the increasing demand for EVs in China. Consistent monthly sales growth continues to show Li Auto’s vehicles are in high demand in the world’s largest auto market. The company has also differentiated itself from its competitors by offering a unique range of extended technology that reduces range anxiety for customers.

From a valuation perspective, Li Auto’s stock remains attractive. Despite shares having appreciated 95.6% YTD, the stock is trading at only 29.3x forward earnings, which still puts its valuation well below that of Tesla’s. Investors willing to bet on the dynamism of China’s EV sector should give Li Auto a look.

Lockheed Martin (LMT)

One of the top U.S. defense contractors, Lockheed Martin (NYSE:LMT), derived 73% of net sales from selling military equipment to the U.S. government in fiscal year 2022. The firm is also a global leader in aerospace and defense manufacturing, prodding products and services for military, civil and commercial customers worldwide.

Moreover, Lockheed Martin has been benefiting from the strong and stable demand for its products and services from both domestic and international customers. Of course, much of this growth admittedly comes from the ever-burgeoning U.S. defense budget. Nonetheless, the contractor’s backlog of orders provides stability for its future revenue and earnings, and defense asset investors should take notice. A recent quarterly sales beat and raised guidance driven by higher weapons demand should keep investors upbeat for the firm’s near-and-medium term prospects.

Though shares are slightly down year-to-date, the stock has risen 31.9% over the past five years, indicating the stock could be a decent long-term hold.

Tokyo Electron (TOELY)

Tokyo Electron (OTCMKTS:TOELY) is a leading Japanese manufacturing company at the center of advanced semiconductor production equipment space. The company offers a wide range of equipment products, such as coaters, developers, etchers, testers and inspection systems. These have all proven to be indispensable in designing and manufacturing semiconductor chips worldwide.

Remarkably, Tokyo Electron has been able to overcome United States sanctions on certain semiconductor products being sold to China. Semiconductor companies being forced to hold back shipments in Q4 2022 caused a slight slip in demand. However, Tokyo Electron assured in its first quarter earnings report for its fiscal year 2024 that demand rebounded. That reflected in the company revising its growth outlook upward for the year. Furthermore, despite US-China geopolitical tensions and Japan also imposing some sale restrictions on novel semiconductor technologies, Tokyo Electron still sees China as an important market for its business, especially for legacy products.

On the over-the-counter market, Tokyo Electron’s shares are up 52.3% while on the Tokyo Stock Exchange shares have risen more than 70.0%. Tokyo Electron provides an invaluable product to the modern digital economy and will likely continue to do so in the near future. Potential investors should consider taking advantage of its relatively cheap valuation now.

On the date of publication, Tyrik Torres 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 Publishing Guidelines.

Tyrik Torres has been studying and participating in financial markets since he was in college, and he has particular passion for helping people understand complex systems. His areas of expertise are semiconductor and enterprise software equities. He has work experience in both investing (public and private markets) and investment banking.

Share with your friends!

Leave a Reply

Your email address will not be published. Required fields are marked *

Get the latest stocks updates
straight to your inbox

Subscribe to our mailing list and get interesting stuff and updates to your email inbox.

Thank you for subscribing.

Something went wrong.