Owing to its wide applications across various end-use industries and the growing adoption of sustainable practices, the chemical industry is positioned to experience significant growth. Also, the integration of digital technologies into processes and operations will positively impact market demand.
With these factors in mind, investing in fundamentally strong specialty chemical stocks LyondellBasell Industries N.V. (LYB), Eastman Chemical Company (EMN), and PPG Industries, Inc. (PPG) could be wise amid rising demand.
The chemical industry is a key contributor to the U.S. economy, providing it with essential raw materials and products for their application across diverse industries, including automotive, healthcare, construction, manufacturing, and electronics. Over time, the chemical industry's scope has only widened.
Further, with the ongoing transformations through innovation, the latest technologies, and the shift towards sustainability and green chemistry, the prospects of the chemical industry are strengthening. The chemical industry is endeavoring to adjust to the evolving environment and thrive with it. The American Chemistry Council (ACC) projects global chemical production to rise 3.5% in 2025.
With growing demand for construction, water treatment, electronics chemicals, and advancements in process technology and trade liberalization, the global specialty chemicals market is poised for significant growth. The global specialty chemicals market is anticipated to grow at a CAGR of 5.2%, resulting in a market volume of $914.40 billion by 2030.
Further, the global artificial intelligence (AI) in chemicals market is expected to reach around $20.55 billion by 2033, exhibiting growth at a CAGR of 31%. The market demand is propelled by rising awareness of AI solutions, the adoption of innovative digital techniques, and the demand for effective manufacturing processes.
In light of these encouraging trends, let’s look at the fundamentals of the three best Chemicals stocks, beginning with number 3.
Stock #3: LyondellBasell Industries N.V. (LYB)
LYB is an international chemical company. The company operates through six segments: Olefins and Polyolefins Americas; Olefins and Polyolefins Europe, Asia, International; Intermediates and Derivatives; Advanced Polymer Solutions; Refining; and Technology.
On November 22, LYB declared a dividend of $1.34 per share. The dividend was paid to shareholders on December 9, 2024, with an ex-dividend and record date of December 2, 2024.
LYB’s annual payout of $5.36 translates to a yield of 7.29% at the current share price. Its four-year average dividend yield is 6.46%. Also, the company’s dividend payouts have increased at a CAGR of 5.9% over the past three years. LYB has raised its dividends for 11 consecutive years.
On August 22, LYB entered into an agreement to acquire full ownership of APK AG in Merseburg, Germany. The strategic acquisition positioned the company to grow and upgrade its Circular and Low Carbon Solutions business, and expand its technology portfolio and circular hub.
In the third quarter that ended September 30, 2024, LYB’s sales and other operating revenues were $10.32 billion. Also, its net income and EPS amounted to $573 million and $1.75 for the quarter, respectively. The company’s EBITDA came in at $1.17 billion for the period.
Analysts expect LYB’s EPS for the fiscal year (ending December 2025) to increase 19.7% year-over-year to $8, and its revenue is expected to be $33.22 billion for the same period. Moreover, the company surpassed the consensus revenue estimates in three of the trailing four quarters.
LYB’s stock declined 10.5% over the past month to close the last trading session at $73.50.
LYB’s robust outlook is reflected in its POWR Ratings. The stock has an overall rating of B, which translates to a Buy in our proprietary rating system. The POWR Ratings are calculated by considering 118 different factors, each weighted to an optimal degree.
The stock has a B grade for Value. It is ranked #35 of 79 stocks within the B-rated Chemicals industry.
To see additional POWR Ratings of LYB for Growth, Sentiment, Quality, Stability, and Momentum, Click here.
Stock #2: Eastman Chemical Company (EMN)
EMN operates internationally as a specialty materials company. The company operates in Additives & Functional Products segment; Advanced Materials segment; Chemical Intermediates segment; and Fibers segment.
On December 5, EMN’s Board of Directors declared an increase in the quarterly cash dividend from $0.81 to $0.83 per share on its common stock. The dividend is to be paid on January 8, 2025, to stockholders of record as of December 16, 2024.
EMN pays an annual dividend of $3.32, which translates to a yield of 3.62% at the current share price. Its four-year average dividend yield is 3.16%. Moreover, the company’s dividend payouts have increased at a CAGR of 5.3% over the past five years. Eastman has raised its dividends for 15 consecutive years.
For the third quarter that ended September 30, 2024, EMN’s sales revenue increased 8.7% year-over-year to $2.46 billion. Its gross profit rose 25% from the prior-year quarter to $605 million. Non-GAAP net earnings attributable to EMN and EPS of $266 million and $2.26 indicate growth of 52% and 53.7% over the previous year’s quarter, respectively.
Analysts expect EMN’s revenue for the fourth quarter (ending December 2024) to increase 3.2% year-over-year to $2.28 billion, while its EPS for the same period is expected to improve 22.2% year-over-year to $1.60. Further, the company has topped the consensus revenue and EPS estimates in all four trailing quarters.
Over the past year, the stock has gained 4.3% to close the last trading session at $91.76.
EMN’s robust outlook is reflected in its POWR Ratings. The stock has an overall rating of B, which translates to a Buy in our proprietary rating system.
The stock has a B grade for Value. Within the same industry, EMN is ranked #32 of 79 stocks.
Click here to access additional ratings of EMN for Growth, Momentum, Stability, Quality and Sentiment.
Stock #1: PPG Industries, Inc. (PPG)
PPG is engaged in the global manufacturing and distribution of coatings, paints, and specialty materials. The company operates through Performance Coatings and Industrial Coatings segments. PPG offers its products and services to industries, including military, aviation, agriculture and construction, consumer electronics, and automotive.
On December 2, PPG completed the sale of 100% of its architectural coatings business in the U.S. and Canada at a transaction value of $550 million to American Industrial Partners (AIP), an industrial investor. The strategic sale decision and the sale of its silica products business were made to optimize PPG’s portfolio.
It will improve the company’s organic growth and financial return profiles and increase the capability to channel growth.
On November 18, PPG entered a strategic partnership with SARO/Siccardi, Italy’s largest powder coatings distributor. The collaboration could strengthen PPG’s distribution network in Italy, enabling it to expand its market presence, enhance accessibility, and position itself as a leader in the Italian powder coatings market.
For the third quarter that ended September 30, 2024, PPG reported net sales of $4.58 billion. Its income before income taxes grew 9.7% from the year-ago value to $611 million. Also, the company’s adjusted net income and EPS came in at $500 million and $2.13, up 1.4% and 2.9% from the prior year’s quarter, respectively.
Further, as of September 30, 2024, PPG’s total current assets stood at $7.91 billion, compared to $7.43 billion on December 31, 2023.
Street expects PPG’s EPS for the fourth quarter (ending December 2024) to increase 7.4% year-over-year to $1.64. For the fiscal year 2024, the company’s EPS is expected to grow 6.4% year-over-year to $8.16.
Shares of PPG have increased marginally over the past month to close the last trading session at $120.21.
PPG’s solid outlook is reflected in its POWR Ratings. The stock has an overall rating of B, which translates to a Buy in our proprietary rating system.
PPG has a B grade for Growth and Quality. It is ranked #22 out of 79 stocks in the B-rated Chemicals industry.
Click here to access additional PPG ratings for Value, Stability, Sentiment, and Momentum.
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PPG shares were trading at $119.96 per share on Monday afternoon, down $0.25 (-0.21%). Year-to-date, PPG has declined -18.11%, versus a 26.17% rise in the benchmark S&P 500 index during the same period.
About the Author: Rjkumari Saxena
Rajkumari started her career as a writer but gradually shifted her focus to financial journalism, leveraging her educational background in Commerce. Fascinated by the interplay of business and economic shifts in equities, she aspires to evolve as an analyst. With a knack for simplifying complex financial concepts, her mission is to empower investors with insights that lead to profitable decisions.
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