Is Carlisle Companies Inc. (NYSE:CSL) the Next Big Bet in Small-Cap Manufacturing Stocks?

We recently released a compilation of the 15 Little-Known Manufacturing Equities That Hedge Funds Are Snatching Up In this piece, we will examine how Carlisle Companies Inc. (NYSE:CSL) measures up against other small-cap manufacturing companies.

On February 26, Liz Ann Sonders, who serves as the chief investment strategist at Charles Schwab, appeared on CNBC’s 'Squawk on the Street' to address potential slowdowns in manufacturing caused by continuing policy uncertainties. According to her, the prevailing mood in the markets currently centers around fears related to economic expansion rather than inflationary pressures. During this discussion, she pointed out several softening metrics including dips in consumer confidence levels, weaker retail sales numbers, and diminishing service sector Purchasing Managers Index scores. Additionally, she highlighted how heightened policy ambiguities contribute to decreased inclinations towards acquiring significant durable equipment and result in cutbacks in planned investments and expenses. She went further to explain that throughout the last twelve months, bond yields have fluctuated significantly based predominantly either on shifts in reported price trends or indications of economic performance—whether increasing or decreasing. Her view suggests that the latest dip observed in these rates can be attributed mainly to apprehensions regarding an impending reduction in GDP growth instead of anticipations for lower prices across the economy. Consequently, investor preferences seem to lean toward safer segments within equity markets indicating overall increased prudence among participants.

Recently released Purchasing Managers' Index (PMI) data indicates a downturn in service activities, whereas manufacturing seems to be gaining momentum. This shift might lead to a favorable alignment between both industries. However, Sonders believes that this uptick in manufacturing may be jeopardized because of persistent policy uncertainties. Consequently, numerous firms in the manufacturing domain are becoming more hesitant regarding their future investment plans and expansions. Sonders further noted that although substantial deficit reduction talks were initially aiming for $2 trillion, the real numbers appear far lower. Currently observable cutbacks total less than $10 billion. According to her, focusing solely on these expenditure reductions would be too hasty since factors like tariff impacts, immigration policies, deportation measures, and regulatory adjustments are jointly exerting negative pressures on economic growth forecasts and inflating inflationary expectations. Additionally, she mentioned that proposed alterations in tax laws will probably influence next-year projections instead of affecting short-term trends significantly.

Our Methodology

Initially, we went through financial news articles, along with data from the iShares U.S. Manufacturing ETF and the Vanguard Industrials ETF, alongside insider information from Insider Monkey’s Q4 2024 report on hedge fund activities, to create a roster of small-cap manufacturing firms attracting investment from these funds. Here, "small-cap" refers to companies valued at between $10 billion and $20 billion as of April 25th. From this initial group, we narrowed down our selection to highlight the top 15 stocks based on their ranking according to how many different hedge funds were backing each one. When multiple stocks had identical numbers of supporting hedge funds, we decided among them using their respective market caps for final placement.

Why do we pay attention to the stocks that hedge funds amass? It’s straightforward: our analysis indicates that mimicking the leading stock choices from premier hedge funds allows us to surpass market performance. Each quarter, our biannual advisory highlights 14 small-cap and large-cap equities, achieving a return of 373.4% since May 2014, which significantly outperforms its benchmark by 218 percentage points. s ee more details here ).

A detailed view of a technician putting together an intricate wiring assembly for a construction item.

Carlisle Companies Inc. (NYSE: CSL )

Market Capitalization as of April 25: $16.22 billion

Number of Hedge Fund Owners: 42

Carlisle Companies Inc. (NYSE: CSL), listed on the New York Stock Exchange, specializes in manufacturing and supplying various components for building envelopes as well as related services and solutions. Operating across two main sectors—Carlisle Construction Materials and Carlisle Weatherproofing Technologies—the firm focuses on producing single-ply roofing materials along with guaranteed rooftop systems and complementary items. Additionally, they provide comprehensive building envelope options.

In the first quarter of 2025, the company's CCM (Carlisle Construction Materials) division saw revenues reach $799 million, marking an increase of 2% compared to the same period last year. This growth can be attributed to the addition of MTL and robust reroofing activities, though these were partially balanced out by a 1% drop in organic sales. The incorporation of MTL contributed significantly to CCM’s earnings via enhanced product lines in architectural metals as well as notable reductions in operational costs due to synergy achievements from the merger. Reroofing needs account for about 70% of CCM’s commercial operations.

Carlisle Companies Inc. (NYSE:CSL) anticipates mid-single-digit revenue growth for the CCM segment for 2025. While Q2 2025 for CCM will reflect a negative impact from accelerated purchases in Q1 ahead of anticipated tariff-related price increases, the underlying strength will eventually provide a stable and recurring revenue stream years to come.

The Madison Mid Cap Fund commented on Carlisle Companies Incorporated (NYSE:CSL) as follows in their Q1 2025 report. investor letter :

We acquired shares in two additional stocks during the quarter. Carlisle Companies Incorporated (NYSE:CSL) stock was under pressure due to worries about both residential and non-residential real estate demand as a result of interest rate levels and overall economic uncertainties. Nonetheless, the valuation appears attractive considering the robust long-term prospects for demand and profitability."

Overall, CSL ranks 6th On our roster of small-cap manufacturing equities favored by hedge funds, we highlight CSL’s growth prospects. However, we place greater confidence in the anticipated robust performance and rapid gains associated with AI-centric stocks. One such AI equity has surged this year despite many prominent peers shedding roughly 25% from their values. Should you seek an alternative AI investment to CSL—one trading below five times its earnings—consider exploring our detailed analysis presented in our latest report. cheapest AI stock .

READ NEXT: 20 Top AI Stocks You Should Consider Buying Today and 30 Top Stocks to Purchase Currently as Recommended by Millionaires .

Disclosure: No conflicts of interest. This article was initially published here. Insider Monkey .

Share this post