Is Owens Corning (OC) the Next Big Bet in Small-Cap Manufacturing Stocks?

We recently released a list of the 15 Little-Known Manufacturing Stocks That Hedge Funds Are Snapping Up In this piece, we will examine how Owens Corning (NYSE:OC) 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 due to persistent policy uncertainties. According to her, investor sentiments currently revolve around fears related to economic expansion rather than inflationary pressures. During this discussion, she highlighted several deteriorating metrics like dips in consumer confidence levels, weaker retail sales numbers, and diminishing service sector Purchasing Managers' Index (PMI) scores. Additionally, she pointed out that heightened political unpredictability has resulted in diminished appetite for significant investments in durable equipment and curtailed business expenditure strategies. She further clarified that throughout the last twelve months, bond markets experienced fluctuations where yield movements were predominantly influenced either by shifts in perceived inflation trends or changes in expected economic performance—whether increasing or decreasing. In light of these observations, Sonders believes that the latest dip in interest rates can be attributed mainly to anxieties surrounding slower-than-expected economic progress instead of anticipations regarding lower future price hikes. Consequently, this shift towards pessimism among traders is evident from their inclination toward investing in safer asset classes, indicating an overall cautious approach across financial circles.

New Purchasing Managers' Index (PMI) reports indicate a downturn in service activities, whereas manufacturing seems to be gaining momentum. This shift might lead to a favorable alignment between both industries. However, according to Sonders, the progress in manufacturing may face challenges because of continuing uncertainties related to policy decisions. Consequently, numerous firms in the manufacturing industry are becoming more hesitant when considering future expansions and capital expenditures. Sonders further noted that although talks were centered around substantial budget reductions initially aiming for $2 trillion, the real savings fall far short of those projections. Currently, observable cutbacks total under $10 billion. In her view, concentrating solely on these expenditure decreases would be too hasty since factors like tariff adjustments, immigration laws, enforcement practices regarding deportations, and modifications in regulations jointly exert negative pressures on economic forecasts and drive up anticipated levels of inflation. Additionally, she mentioned that proposed alterations in taxation primarily stand to impact end-of-year evaluations instead of influencing immediate trends significantly.

Our Methodology

Initially, we reviewed financial news articles, along with data from the iShares U.S. Manufacturing ETF and the Vanguard Industrials ETF, alongside insider trading information compiled by Insider Monkey for their Q4 2024 report on hedge fund activities. This helped us assemble a roster of smaller-sized manufacturing company shares currently attracting investment interest among hedge funds. By our definition here, "small-cap" equates to companies whose total stock value falls within the range of $10 billion to $20 billion, based on figures up until April 25th. From these findings, we pinpointed the leading fifteen picks and organized them according to how many different hedge funds had invested in each one, starting with the least popular choice at the bottom. Should multiple firms share similar levels of investor backing, we resolved ties using the respective market capitalization sizes as a deciding factor.

Why do we focus on the stocks that hedge funds amass? It's straightforward: our studies indicate that mimicking the top stock choices from leading hedge funds allows us to surpass the market performance. Each quarter, our monthly publication recommends 14 small-cap and large-cap stocks, achieving a return of 373.4% since May 2014, which significantly exceeds its benchmark by 218 percentage points. s ee more details here ).

A group of construction personnel fitting an roofing system using asphalt tiles.

Owens Corning (NYSE: OC )

As of April 25, the Market Capitalization stands at $12.32 billion.

Number of Hedge Fund Holders: 48

Owens Corning (NYSE:OC) manufactures residential and commercial building products through four segments: Roofing, Insulation, Doors, and Composites. The company offers laminate and strip asphalt roofing shingles, roofing components, and oxidized asphalt. It also provides high, mid, and low temperature products.

In the fourth quarter of 2024, the Roofing division of the company reported sales amounting to $912 million, marking a minor decline compared to the previous year. Despite this dip, the segment maintained strong interest in its shingles—components essential for roofing that form a watertight cover—and saw favorable pricing outcomes. Importantly, the overall U.S. asphalt shingle market expanded by 1%, and Owens Corning matched this expansion rate with their own U.S. shingle volumes.

In the first quarter of 2025, the company expects revenues from the traditional roofing sector to match those of the previous year, with market deliveries projected to remain steady or decline slightly. Additionally, Owens Corning (NYSE:OC) continues to invest in expanding its shingle production capabilities, including a new laminated shingle factory slated to start operations in 2027.

Overall, OC ranks 4th On our roster of small-cap manufacturing equities favored by hedge funds, we recognize the expansion prospects of OC. However, our confidence leans toward AI shares as they present significant opportunities for substantial gains over a condensed period. Notably, one particular AI equity has surged since early 2025, contrasting with widely recognized AI names which have declined approximately 25% during this timeframe. Should you seek an AI investment option offering greater upside compared to OC yet trading below five times its earnings value, explore our detailed analysis documented 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: There are none to declare. This article was first published here. Insider Monkey .