4 Specialty Chemical Stocks to Buy Despite Supply-Chain Snarls
Zacks Investment Research | Jan 12, 2022 06:27AM ET
The specialty chemical industry reeled under the effects of significant demand contraction in 2020, following a slowdown in industrial and economic activities amid the global health crisis. However, the industry witnessed a recovery in 2021 on an uptick in demand in key markets.
With the reopening of the major economies around the world, demand for specialty chemicals started to pick up on a rebound in global industrial and manufacturing activities. Notably, demand for specialty chemicals in the United States has been driven by a surge in consumer spending, aided by the accelerated deployment of vaccines coupled with the sizable coronavirus stimulus.
While the specialty chemical industry remains hamstrung by supply-chain disruptions and a spike in raw material and logistic costs, healthy demand in key end-use markets bodes well. Stocks like AdvanSix (NYSE:ASIX) Inc. the complete list of today’s Zacks #1 Rank stocks here .
AdvanSix: New Jersey-based AdvanSix is expected to benefit from improved end-market conditions and growth of its differentiated products. ASIX is seeing a recovery in demand across a number of markets, including automotive, building & construction, electronics and packaging. Higher demand is expected to drive its volumes. Strong agricultural industry fundamentals also bode well.
AdvanSix, sporting a Zacks Rank #1, has expected earnings growth of 3.9% for the current year. The Zacks Consensus Estimate for current-year earnings for ASIX has been revised 1.6% upward over the last 60 days. The company beat the Zacks Consensus Estimate in each of the trailing four quarters at an average of 46.9%.
Hawkins: Minnesota-based Hawkins has a Zacks Rank #2. It is seeing strong growth in its Water Treatment unit, riding on strength across pools, resort and fitness center end markets. Acquisitions of ADC and C&L Aqua are also contributing to its performance. Higher demand for health and immunity products is driving its Health and Nutrition segment. HWKN’s Industrial segment is also benefiting from higher sales of agricultural, pharmaceutical and food ingredient products. The acquisition of NAPCO Chemical also expands its Water Treatment business.
Hawkins has expected earnings growth of 15.4% for the current fiscal year. The consensus estimate for HWKN’s earnings for the current fiscal has been revised 5.7% upward over the last 60 days. It beat the Zacks Consensus Estimate for earnings in three of the last four quarters while missing once. It has a trailing four-quarter earnings surprise of roughly 21%, on average.
ICL Group: Israel-based ICL Group carries a Zacks Rank #2. It is benefiting from the strength in its specialties businesses and an upside in commodity prices. ICL is seeing higher demand across consumer electronics, textiles, automotive and construction markets. Higher end-market demand and prices are expected to drive its performance. A recovery in end markets is likely to drive sales of its bromine compounds and phosphorous and magnesia-based products. Solid demand for electric vehicles and energy storage is also expected to drive demand for its phosphate and bromine-based specialty products.
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ICL Group has expected earnings growth of 50.9% for the current year. The Zacks Consensus Estimate for ICL’s current-year earnings has been revised 3.8% upward over the last 60 days. The company beat the Zacks Consensus Estimate in each of the trailing four quarters at an average of 59.6%.
Livent: Pennsylvania-based Livent is expected to benefit from strong demand and high lithium pricing, aided by strong market conditions. Higher realized pricing is expected to drive its top line and margins. LTHM also remains on track with its near-term capacity expansions, with the 5,000 metric ton hydroxide addition in Bessemer City and initial lithium carbonate expansion of 10,000 metric tons in Argentina expected to attain commercial production by third-quarter 2022 and first-quarter 2023, respectively.
Livent, carrying a Zacks Rank #2, has expected earnings growth of 186.7% for the current year. The Zacks Consensus Estimate for earnings for the current year for LTHM has been revised 10.3% upward over the last 60 days.
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