We recently compiled a list of the 10 Most Promising Mid-Cap Stocks According to Hedge Funds. In this article, we are going to take a look at where Carpenter Technology Corporation (NYSE:CRS) stands against the other promising mid-cap stocks.
The S&P 500 May Hit 6,000 in 2024
September closed on a high note, opening a wealth of opportunities for investors. On October 1, Jay Woods, Freedom Capital Markets Chief Global Strategist, appeared in an interview on Yahoo Finance to discuss his predictions for the market.
Woods shares his anticipation for the elections and that the market will take its due course once the elections are over. He believes the technology sector is poised to strengthen as the market rotates from sector to sector. Nvidia, Apple, and Microsoft are currently 15%, 5%, and 8% off their highs and a strong tailwind may be in store for us.
September was stronger than expected and 19 out of 21 times the market hit a high during the month in the past, the market has gone way higher in the following months, or the fourth quarter. Woods reiterated that the setup for a strong comeback is there, especially with elections, and that rotational trade will continue.
Speaking of employment data, Woods suggests that the market has particularly been overreacting to data points and that anything jittery will adversely impact investor confidence. He predicts the unemployment rate to sit at 4.2% and hints that a percentage higher than this will lead to more discussions on bigger rate cuts. He advises that investors need to start blocking out some of these headlines and focus on how stocks have performed in the third quarter of 2024.
The Job Market is Extremely Crucial
On September 30, Matt Stucky, Northwestern Mutual Wealth Management’s chief portfolio manager for equities, appeared in an interview on Yahoo Finance to discuss his market thesis.
According to Stucky, the job market is extremely crucial and investors must focus on that. Since the beginning of 2024, employment data has been consistently declining to the point it may hint at a weakening economy.
On the flip side, the third quarter stood out. The third quarter of 2024 saw the market broaden to sectors other than tech. Five out of seven sectors on the S&P 500 experienced tremendous earnings growth, compared to only two in the second quarter of the same year.
As the market broadens, he expects the market to post earnings growth between 9% to 10% this year and 14% to 15% for the next year. Stucky’s expectations are rather optimistic and believes the economy will head to a soft landing. He also expects the average investor to be more inclined to stocks that have consistent high margin growth in 2025 and ahead. For this year, however, Stucky believes that the defensive sector, especially utilities, remained the strongest.
While the financial markets may remain uncertain, investors may look for cheaper and less-risky investments. That said, let’s look at some of the most promising mid-cap stocks according to hedge funds.
Our Methodology
To find the most promising mid-cap stocks according to hedge funds, we used the Finviz stock screener. We set the market capitalization filter to range between $2 billion and $10 billion. We then examined the hedge fund sentiment of these stocks as of Q2 2024 and picked the most popular ones. The stocks are sorted in ascending order of the number of hedge fund holders as of Q2 2024.
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 an industrial robot welding titanium alloys in a metal fabrication facility.
Carpenter Technology Corporation (NYSE:CRS)
Number of Hedge Fund Holders: 50
Market Capitalization as of October 10, 2024: $8.13 Billion
Carpenter Technology Corporation (NYSE:CRS) is a steel company that ranks 10th on our list of the most promising mid-cap stocks according to hedge funds. The company provides steel products in several industries including defense, medical, energy, industrial, transportation, and aerospace. The company offers and sells steel parts and components, distribution solutions, value-added services, and quality assurance and control services.
During the fiscal fourth quarter of 2024, Carpenter Technology Corporation (NYSE:CRS) increased net sales by 15% sequentially, driven by the growing demand from defense, aerospace, and medical end-use markets. In addition to that, the company generated $125.2 million in operating income, up by 39% sequentially. For the fiscal full year 2025, the company expects operating income to range between $460 million to $500 million. Carpenter Technology Corporation (NYSE:CRS) believes its broad portfolio and productivity gains promise strong financial results in fiscal year 2025.
Carpenter Technology Corporation (NYSE:CRS) is a buy and we say that because of its presence in high-growth markets. These markets have strong fundamentals and have a growing demand environment. In addition to that, the company owns a diverse range of unique assets that are quite challenging to replicate, distinguishing it from its competitors. Overall, CRS has strong fundamentals and 50 hedge funds were bullish on the stock at the close of Q2 2024.
Invesco Discovery Fund stated the following regarding Carpenter Technology Corporation (NYSE:CRS) in its Q2 2024 investor letter:
“Carpenter Technology Corporation (NYSE:CRS) manufactures, fabricates and distributes stainless steels, titanium and specialty metal alloys. Management accelerated its guidance for long-term fiscal 2027 EPS (earnings per share) by a full year. Management also reported quarterly earnings that beat analysts’ expectations and raised guidance for fiscal year 2024.”
Overall CRS ranks 10th among the most promising mid-cap stocks according to hedge funds. While we acknowledge the potential of CRS 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 CRS 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.