The Zacks Analyst Blog Highlights: Kronos Worldwide, Westlake Chemical, Kraton, Albemarle And Celanese
Zacks Investment Research | Dec 13, 2017 10:44PM ET
For Immediate Release
Chicago, IL – December 14, 2017 – Zacks.com announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include Kronos Worldwide, Inc. (NYSE:KRO) , Westlake Chemical Corporation (NYSE:WLK) , Kraton Corporation (NYSE:KRA) , Albemarle Corporation (NYSE:ALB) and Celanese Corporation (NYSE:CE) .
Here are highlights from Wednesday’s Analyst Blog:
U.S. Chemical Industry Set to Ride High: 5 Stocks to Buy
The American chemical industry is riding an upswing of the major world economies with growth rate for the industry surpassing the 20-year average – according to the recently published “Year End 2017 Chemical Industry Situation and Outlook” by the American Chemistry Council (ACC).
The Washington, DC-based chemical industry trade group said that chemical output continued to improve this year notwithstanding the disruptions from Hurricane Harvey with strong gains expected continue in the next two years. “Manufacturing has turned a corner, business investment is on the rise, and domestic oil and gas production is on the rebound. It all sets the stage for tremendous momentum, expansion and capital investment,” ACC chief economist Kevin Swift noted.
U.S. Chemical Industry Set for Solid Growth
The outlook for the American chemical industry paints an encouraging picture. The ACC envisions national chemical production (excluding pharmaceuticals) to rise 0.8% in 2017, further accelerating to a 3.7% growth in 2018 and a 3.9% growth in 2019. The growth is expected to be spurred by higher demand across light vehicles and housing markets, capital investments and improved export markets.
The trade group also expects basic chemicals production to expand 4.7% in 2018 and further gain steam with a 5.2% rise in 2019 on the heels of new capacity additions. Major export markets such as Latin American and Asia are expected to play a significant role in production growth. The specialty chemicals segment is also expected to see production growth of 3% in 2017 and 2.3% in 2018, per the ACC.
Surging Capital Spending
According to the ACC, the United States remains an attractive investment destination for chemical investment and domestic chemical makers continue to enjoy the advantage of access to abundant and cheaper feedstocks and energy. This is driving investment in chemical production projects.
The trade group noted that roughly 320 chemical projects have been already announced worth more than $185 billion, 62% of which is foreign direct investment. Moreover, roughly 65% of the chemical investment announced since 2010 are complete or under construction. New capacity is expected to provide a boost to chemical production as these investments come on stream.
Chemical industry capital spending also continues to go up, clocking $38 billion this year, per the ACC. This also accounts for one-half of overall construction spending by the manufacturing sector. The trade group expects capital spending to rise 6.3% in 2018 and 6.8% in 2019 and eventually reach $48 billion by 2022.
Strengthening Export Markets
The ACC expects improving export markets to contribute to solid growth of the domestic chemical industry. Strengthening export markets and increasing capital spending are driving chemical demand across key end-use markets such as light vehicles and housing.
Total chemical exports went up 4.9% to $127 billion this year while imports rose 2.8% to $96 billion, the trade group noted. Higher exports will result in the United States having a $32 billion trade surplus in chemicals (barring pharmaceuticals) in 2017. Moreover, the ACC sees two-way trade between the United States and its foreign partners to expand 4% year over year and reach $223 billion this year.
5 Chemical Stocks for 2018
The U.S. chemical industry’s upturn is expected to continue next year on continued demand strength across major end-markets and significant capital investment. Amid such a backdrop, it would be a prudent idea to invest in chemical stocks with compelling growth prospects if you are looking to reap solid returns from your portfolio in 2018.
We highlight the following five stocks with Zacks Rank #1 (Strong Buy) or 2 (Buy) that are good options for investment right now. You can see Zacks Investment Research
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