10 Undervalued Chemical Stocks to Invest In

7. Cabot Corporation (NYSE:CBT)

Forward P/E: 13.72

Earnings Growth: 31.20%

Number of Hedge Fund Holders: 22

Cabot Corporation (NYSE:CBT) is an American specialty chemicals and performance materials company. It is a leading provider of reinforcing carbons, specialty carbons, battery materials, engineered elastomer composites, inkjet colorants, masterbatches and conductive compounds, fumed metal oxides and aerogel. Through its wide range of products and solutions, the corporation serves key industries like transportation, infrastructure, environment and consumer.

The company reported strong financial results for the third quarter of fiscal 2024, with diluted earnings per share (EPS) of $1.94 and adjusted EPS of $1.92, reflecting a 35% increase in adjusted EPS compared to the same quarter last year. The Reinforcement Materials segment generated an EBIT of $136 million, a 3% rise year-over-year. The Performance Chemicals segment saw a remarkable 72% increase in EBIT to reach $55 million. During this quarter, Cabot Corporation (NYSE:CBT) generated cash flows from operations totaling $207 million, allowing the company to return $73 million to shareholders through a combination of share repurchases and dividends.

During the company’s Q3 2024, a significant highlight was the launch of Cabot Corporation’s (NYSE:CBT) new REPLASBLAK universal circular black masterbatches, which are the first of their kind with International Sustainability and Carbon Certification (ISCC PLUS). This innovative product line offers customers a versatile masterbatch suitable for various automotive applications, including coloring polyolefins and engineering plastics.

Additionally, on September 20, 2024, Cabot Corporation (NYSE:CBT) announced it had been selected for an award negotiation of up to $50 million from the U.S. Department of Energy. This grant will support the corporation’s development of a new manufacturing facility for battery-grade carbon nanotubes and conductive additive dispersions, critical for the domestic lithium-ion battery supply chain.

Over the past 5 years, Cabot Corporation (NYSE:CBT) has grown its net income at a compound annual growth rate (CAGR) of 16.95%, while its levered free cash flow has increased at a CAGR of 9.54% during the same period.

With strong financial performance, innovative product launches, and strategic investments in sustainability, CBT presents a compelling opportunity. It is one of the best chemical stocks to buy. According to Insider Monkey’s database, 22 hedge funds held stakes in Cabot Corporation (NYSE:CBT) in the second quarter of 2024.