10 Worst Specialty Chemical Stocks to Buy According to Short Sellers

4. Quaker Chemical Corporation (NYSE:KWR)

Number of Hedge Fund Holders: 25

Short % of Shares Outstanding: 6.93%

Quaker Chemical Corporation (NYSE:KWR), headquartered in Pennsylvania, is a global leader in the industrial process fluids and specialty chemicals, serving key industries. The company offers a diverse range of industrial fluids, including metal removal fluids, corrosion inhibitors, specialty greases, and hydraulic fluids.

In Q2 2024, Quaker Chemical Corporation (NYSE:KWR) reported net sales of $464 million, reflecting a 6% YoY decline, largely due to softer industrial activity in both the Americas and EMEA regions. In contrast, the Asia-Pacific segment saw strong performance, with high single-digit volume growth, particularly in China, India, and Southeast Asia. Moreover, weak demand for metalworking applications, particularly in the industrial and automotive sectors, negatively impacted sales.

Despite this revenue decline, net profit improved by 10% for the quarter compared to Q2 2023, driven by lower raw material costs and enhanced operational efficiencies. Cabot Corporation (NYSE:CBT)’s disciplined cost management and focus on its value-driven model helped mitigate the impact of weaker demand in metalworking applications, supporting profitability in a challenging market environment.

Liquidity remained strong, with $46 million in operating cash flow during the quarter, alongside a net leverage ratio of 1.7x adjusted EBITDA. Additionally, $8 million in dividends were paid out in the quarter, and 49,000 shares worth $7.8 million were repurchased.

In July 2024, Quaker Chemical began construction on a new manufacturing facility in China to enhance production capabilities and support growth in the Asia-Pacific region. The facility is part of the company’s global supply chain strategy to meet increasing customer demand.

However, Cabot Corporation (NYSE:CBT) experienced a 0.90% dip in share price and a 22.43% YTD decline, largely due to softer industrial activity in both the Americas and EMEA regions. Continued challenges in the metalworking sector and unplanned customer outages also created short-term headwinds.

As of Q2 2024, 25 hedge funds, with a combined investment of $176.6 million, are bullish on the stock, according to Insider Monkey’s database. KWR is one of the worst specialty chemical stocks to buy according to short sellers.