The performance of chemical stocks has been mixed in recent months. While the NYSE Chemical Index declined b1% between May and October, some chemical stocks have managed to buck this trend. This article will look at four of the best chemical stocks to buy. Each of these companies has a compelling story, backed by market trends that point to sustained growth for the foreseeable future. They aren’t all small and unlisted companies either; each is listed on a major stock exchange and boasts a market capitalization above $1 billion.
The Mosaic Company (MOS)
The Mosaic Company is a fertilizer producer with a market capitalization of $23 billion. It produces potash, phosphate, and nitrogen, which have fertilizer. The company also produces animal feed and garden fertilizers. Mosaic’s production facilities are primarily located in the U.S., Canada, and Israel. In fiscal 2018, Mosaic generated $14 billion in sales and $2.3 billion in earnings. The company is one of the most diversified fertilizer producers in the world, with a strong presence in the U.S., Canada, and Israel. Mosaic generates around 50% of its sales in the U.S. market, with the remainder generated in other countries such as Brazil, China, and India. A fantastic management team manages Mosaic with a track record of success. The company has developed positive free cash flow in the last 21 years and has an excellent balance sheet with minimal debt. Mosaic is currently trading at around $30 per share. This gives the company a trailing earnings multiple of just under 10. This is well below the average multiple of the S&P 500, which currently sits at 18.9.
Olin Corporation (OLN)
Olin Corporation is a significant chemical industry player, with a market capitalization of $9.8 billion. The company manufactures and distributes various chemicals, including salt, titanium dioxide, and engineered chemicals. Olin’s products are used in many industries, including paper, automotive, personal care, and construction. In fiscal 2018, Olin generated $4 billion in sales and $480 million in earnings. Olin has a strong presence in the paper, automotive, and personal care industries. In the paper industry, Olin supplies chemicals for the production of paper bags and sacks, as well as corrugated boxes. The automotive sector accounts for around 30% of Olin’s revenue, with the remainder coming from the paper and personal care industries.OLN currently trades at around $45 per share. Thiabouts, the company has a trailing earnings multiple of around 8.5. This multiple is about the average for the chemicals industry, which currently sits at 9.2.OLN’s earnings have been rising steadily over the past five years, thanks to increased demand in the automotive and paper industries. The company also boasts a strong balance sheet with minimal debt.
RPM International (RPM)
RPM International is another large chemicals company with a market capitalization of $18 billion. The company produces various chemicals, including packaging, construction, agricultural, industrial, and household chemicals. In fiscal 2018, RPM generated $4.4 billion in sales and $1.3 billion in earnings.RPM has a strong presence in the packaging, construction, and household chemicals industries. The packaging sector accounts for around 30% of the company’s revenue, with the remaining 70% coming from the other two sectors.RPM currently trades at around $37 per share. Thaboutes, the company, has a trailing earnings multiple of around 10. This multiple is higher than the average for the chemicals industry, which currently sits at 9.2. However, RPM has a definite competitive advantage thanks to its broad product portfolio, low-cost production facilities, and low debt level.
Westlake Chemical (WLK)
Westlake Chemical is a major producer of chemicals, with a market capitalization of $10.3 billion. The company produces various products, including ethylene, polyethylene, polyolefins, and other specialty chemicals. Westlake distributes its products around the world, with the U.S. accounting for around 50% of total sales. In fiscal 2018, Westlake generated $5.6 billion in sales and $1.1 billion in earnings. Ethylene is Westlake’s most extensive product, accounting for around 40% of the company’s revenue. Ethylene is used in the production of plastics, including polyethylene and polypropylene. In addition, ethylene is an essential chemical in many industries, including agriculture, construction, and packaging.WLK currently trades at around $36 per share. This gives the company a trailing earnings multiple of around 10. This is slightaboutve the average for the chemicals industry, which currently sits at 9.2. Westlake has a competitive advantage thanks to its low-cost production facilities and highly diversified product portfolio. The company is also financially sound, with a debt-to-equity ratio of just 0.3.