10 Best Specialty Chemical Stocks To Buy Now

4. Ashland Inc. (NYSE:ASH)

Upside Potential: 20.64%

Number of Hedge Funds Holders: 25

Operating in the life sciences, personal care, intermediaries, and specialty additives sectors, Ashland Inc. (NYSE:ASH) serves both consumer and industrial segments. The company provides pharmaceutical solutions, nutrition solutions, biodegradable performance materials, and advanced materials that act as surfactants and modifiers.

Ashland Inc. (NYSE:ASH) posted a revenue of $575 million in the quarter ended on March 31, 2024. The company’s share price showed a consistent upward trend in the first half of 2024, rising from $83.7 at the start of the year to $101.3 in the second quarter of 2024, yielding a 20.9% return. Sales were boosted by an increase in volume of personal care and specialty additive segments reflecting an increase of 1.2% compared to the same quarter last year. However, sales in the life sciences segment were down by 7.5%, reflecting weaker demand for vinyl pyrrolidone and derivatives (VP&D), mainly used in pharma and crop-care markets.

Overall, the company reported an adjusted EBITDA of $126 million, down by 13% on a YoY basis due to pricing concerns. The company has a strong cash position on the balance sheet, with $439 million in cash available; however, the company has $1.3 billion in long-term debt, which investors should monitor closely.

Along with that, the company has signed an agreement on July 5, 2024 to sell its nutraceuticals business, which is expected to be completed in the third quarter of 2024, and is expected to help the company optimize its product mix.

The company has also repurchased $130 million in shares as part of a disciplined capital approach signaling the trust the company holds in its valuation. Despite this positive news, the weakening demand trend remains a concern for management, who are hopeful for improvement later in the year.

According to Guillermo Novo (Chair & CEO of Ashland):

“Although overall demand trends are improving, there is uncertainty around specific industry and regional dynamics. To be prudent, we are planning for a choppy demand environment”

Whether the demand improves later in the the year is something investors should keep an eye on. However, the company has emphasized its strategic decisions for long-term profitability, despite short-term demand disruptions. Considering these factors, the share price has an upside potential of 20.64%, with four analysts bullish on the stock. As such, 25 hedge funds are bullish on the stock, with investments totaling $540 million. Thus, the stock makes it to our list of the 10 Best Specialty Chemical Stocks To Buy Now.