Top 5 rubber stocks to buy in 2021
When it comes to investing, all attention tends to be on health, technology and increasingly renewable energies. But these aren’t the only stocks in the block, and some old stalwarts can add value to your portfolio as well. One of those old reliable industries is rubber: there is always some level of demand, and that probably won’t change anytime soon.
But recent economic conditions make rubber even more intriguing than usual. Car tires are one of the main uses of rubber, and a strong economic recovery is likely to lead to strong demand for new cars. Therefore, we might also see a big increase in the demand for rubber, as many people come to the dealership to buy a new car.
It’s not just the auto industry, of course. CNBC reported that disruptions in the supply chain are causing major disruption as well. And we use rubber for many essential items, including personal protective equipment and countless other items. With increased demand and supply chain disruptions, rubber stocks are set to increase.
Here are some of the best rubber stocks to buy:
- Goodyear tire and rubber (Nasdaq: GT)
- Trinséo (NYSE: TSE)
- Michelin (OTC: MGDDY)
- Carlisle Companies (NYSE: CSL)
- Protolabs (NYSE: PRLB)
If you’ve never invested in rubber stocks before, you might be wondering if this is a good investment. Let’s take a look at this question before we take a closer look at each action. And if you want to see how your investment portfolio could grow, check out our free investment calculator.
Is rubber a good investment?
Rubber can certainly be a good investment because it is almost ubiquitous; it is used in many different products including tires, footwear, pharmaceuticals, textiles and many other products. As Zacks notes, rubber is among the most profitable industries when it comes to natural resources.
But rubber is not exactly the most innovative product. It might have been decades ago, but nowadays it’s something most of us are used to seeing. We don’t really ask for as much rubber as we do for products that contain it. Therefore, it is only when the demand for these products increases that the demand for rubber tips increases. And as mentioned earlier, we are currently at a point where many people are looking to buy new cars, and the use of rubber in tires could cause demand to increase.
However, these things can be very cyclical. The Zacks page linked above highlights this very prominently. There you can see that the rubber tire industry has a YTD performance of 42.90% versus 16.09% for IVV, an S&P 500 fund. But as good as it sounds, the 5 year performance for rubber tires is -33.71% compared to 112.67 for IVV. Given the downside risk, rubber is probably best used as part of a balanced portfolio containing more balanced assets, such as funds like IVV.
Rubber stocks to buy now
If you want to “bounce” your returns higher with rubber stocks, here are some of the best rubber stocks to buy right now. Keep an eye out for them as the situation in the auto industry evolves.
Goodyear tire and rubber
Goodyear Tire & Rubber is a tire manufacturer that manufactures tires for a variety of uses. Automotive tires are one of the primary uses for Goodyear tires. However, they are also used on buses, trucks, airplanes, motorcycles, mining equipment, industrial equipment, and agricultural equipment. In addition to the name Goodyear, it also has Dunlop and Kelly tires under its belt. Goodyear has been around since 1898 and was the world’s first tire manufacturer to enter the Chinese market. It produces a line of tires, rubber products and chemicals in the United States and Canada.
Trinseo is a global materials company that manufactures latex, plastics and synthetic rubber. In particular, it produces plastic for Lego. Regarding rubber, Trinseo produces styrene-butadiene rubber (SSBR). This material is mainly used in high performance tires. In addition to Legos, its plastic is used in automotive applications, LED lighting, and medical devices. Trinseo is growing rapidly, with 17 manufacturing facilities and 11 research facilities around the world. In addition, it is already seeing a significant increase in its income as it grows. Its website notes that Trinseo is “committed to making a positive impact on society” and that it will support the “sustainability goals of our customers in a wide range of end markets”.
Michelin is another big name in the tire manufacturing industry, and the demand for new cars places it clearly on this list. In addition to the Michelin tire brand, the company also owns BFGoodrich and Uniroyal. BFGoodrich is a premium tire brand for sports cars, off-road vehicles and light trucks. Michelin is the largest tire manufacturer in the United States and the second in the world. It has 34 plans in two countries and had more than $ 8 billion in sales in 2020. Its revenue has increased, as has its share price. As the situation in the automotive industry evolves, it will be interesting to see how Michelin performs.
Founded in 1917 and headquartered in Scottsdale, Arizona, Carlisle Companies isn’t just about rubber. Rather, it is an umbrella under which there are a number of different operations. Its products and services include healthcare, commercial roofing, aerospace and electronics, lawn and garden, agriculture, energy, mining and construction equipment, and catering. Of course, there are many uses for rubber and plastic in these industries. In 2018, Carlisle Companies released a plan called Vision 2025 in which it detailed how it will continue to grow over the next 100 years.
Protolabs is a fascinating company. It produces low volumes of 3D printing, CNC machining, sheet metal fabrication and custom injection molded parts. These parts are then used for small series and prototypes. The company describes itself as “the fastest digital manufacturing service in the world.” It also supplies commercial rubber, metal and plastics. Given its business model, it was able to produce several items during the coronavirus pandemic, including face shields, plastic clips, and items used in test kits. They in turn have been used in hospitals in Minnesota, where the company is based.
More investment opportunities
The above rubber stocks could produce big returns for investors. However, there are many industries and stocks to choose from. Here are other investment and research opportunities …
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About Bob Haegele
Bob Haegele is a personal finance writer who specializes in investing and retirement planning. His heavy student loan burden inspired him to pay off his loans, and now he’s helping others get their finances in order. When he’s not writing he enjoys travel and live music.