Strong World Economy Lifts Chemical Firms
Zacks Investment Research | Jun 21, 2017 05:06AM ET
The Diversified Chemicals industry inside our Zacks Industry Ranks is a big, big group of firms. It holds 45 companies.
That means this, towards any analysis of fundamentals: the huge number of corporate actors in the space makes it much, much tougher to turn up any aggregate annual earnings revision dial.
That makes it all the more impressive to see. The Diversified Chemical industry is indeed highly ranked (with a top 12% spot) at #33 of 265 at Zacks. In the last few weeks, we counted 8 positive analyst earnings revisions, versus just 3 negative ones.
Year-to-date, this Diversified Chemicals industry group returned +11.8% versus the S&P500 at +9.7%. That makes it clear. This top Zacks Rank Industry has the individual stock outperformers.
What Is Going On?
According to c&en (Chemical Engineering News), chemical firms releasing Q1-2017 financial results reported strong demand for a broad range of products including seeds, electronic materials, and even textile dyes.
Several firms posted Q1 earnings growth that exceeded expectations. For example, both volumes and prices were up at giant Dow Chemical (NYSE:DOW), as the company reported gains across businesses serving packaging, transportation, infrastructure, consumer care and electronic materials.
CEO Andrew N. Liveris linked Dow’s strength in operations to the growing global economy. What’s more, demand growth was strong across China, the U.S., and Europe.
See the Diversified Chemicals chart below:
Industrial demand gave the German chemical conglomerate BASF room to hike basic chemical prices an average of 8% in the first quarter. And like Dow, BASF saw volumes increase broadly in basic chemicals, performance products, and functional materials.
Strong market conditions for polyurethanes at the U.S. chemical firm, Huntsman Corp. gave it an opportunity to raise its prices for methylene diphenyl di-isocyanate. And it sold 10% more performance products than in the year-ago quarter. Textile chemicals and dyes were big sellers in Asia, Europe and South America.
The succinct answer? The current global economy is stronger than most traders think!
Three Top Chemical Stocks
(1) BASF (BASFY): This is a Zacks #1 Rank (STRONG BUY) stock.
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The long-term Zacks VGM score is a B, with a B in Value and a C in Growth. The company reports earnings again on July 26th.
BASF is the world's leading chemical company. Its portfolio ranges from chemicals, plastics, performance products and agricultural products to oil and gas.
As a reliable partner BASF creates chemistry to help its customers in virtually all industries to be more successful. With its high-value products and intelligent solutions, BASF plays an important role in finding answers to global challenges such as climate protection, energy efficiency, nutrition and mobility.
(2) Chemours (CC):This is a Zacks #1 Rank (STRONG BUY) stock.
The long-term Zacks VGM score is an A, with a B in Value and an A in Growth. The Company reports earnings again on August 14th.
Chemours Company is involved in chemical business. It operating segment consists of Titanium Technologies, Fluoroproducts and Chemical Solutions.
- Titanium Technologies segment produces titanium dioxide and premium white pigment.
- Fluoroproducts segment provides fluoroproducts, refrigerants and industrial fluoropolymer resins.
- Chemical Solutions segment provides industrial and specialty chemicals.
The company's brands consist of Teflon, Ti-Pure, Krytox, Viton, Opteon and Nafion. Chemours Company is headquartered in Wilmington.
(3) Huntsman (HUN):This is a Zacks #1 Rank (STRONG BUY) stock.
The long-term Zacks VGM score is a B, with an A in Value and a B in Growth. The Company reports earnings again on July 26th.
Huntsman Corporation is among the world's largest global manufacturers of differentiated and commodity chemical products for a variety of industrial and consumer applications.
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