10 Worst Specialty Chemical Stocks to Buy According to Short Sellers

2. WD-40 Company (NASDAQ:WDFC)

Number of Hedge Fund Holders: 22

Short % of Shares Outstanding: 9.78%

WD-40 Company (NASDAQ:WDFC), headquartered in San Diego, California, develops and sells maintenance, home care, and cleaning products globally. Geographically, it operates in the Americas, Europe, the Middle East and Africa (EMEA), and the Asia-Pacific region. Its Specialty segment offers professional-grade products such as penetrants, degreasers, lubricants, and rust removers under the WD-40 Specialist brand.

In Q3 2024, WD-40 Company (NASDAQ:WDFC) reported record net sales of $155 million, up by over 9% year-over-year, driven by strong volume growth across all regions. The WD-40 Specialist segment saw impressive growth, with sales increasing 10% in the Americas, 11% in EIMEA, and surging 30% in Asia-Pacific, particularly in China, where sales jumped 47%.

Net income for the quarter was $19.8 million, a 5% increase over the prior year, mainly due to a favorable sales mix and lower costs in specialty chemicals, although this was partially offset by higher operating expenses.

On the liquidity front, WD-40 Company (NASDAQ:WDFC) maintained a solid cash balance, with $65 million in cash flow from operations year-to-date. Additionally, the company used $12 million to pay down higher interest-rate borrowings, reinforcing its strong financial position. In July 2024, it also announced a quarterly dividend of $0.88 per share.

WD-40 Company (NASDAQ:WDFC) has made significant strides in expanding its geographic reach, increasing premium product sales, and growing its Specialist product line for professionals. A major focus on accelerating digital commerce has driven an 18% increase in e-commerce sales.

Despite strong financial performance, the stock saw a 2.55% dip over the past month, likely due to its high dividend payout ratio (greater than 50%), which limits reinvestment and may have caused short-term negative sentiment. However, the stock is up 6.74% YTD, driven by robust quarterly performance exceeding market expectations, and boosting investor confidence.

As of Q2 2024, 22 hedge funds with a combined investment of $169.2 million are bullish on the stock, according to Insider Monkey’s database.