12 Best Basic Materials Stocks to Buy According to Analysts

5) Westlake Corporation (NYSE:WLK)

Average Upside Potential: 41.2%

Number of Hedge Fund Holders: 38

Westlake Corporation (NYSE:WLK) is engaged in the manufacturing and marketing of performance and essential materials, and housing and infrastructure products. Truist initiated coverage of the company’s stock with a “Buy” rating and a price objective of $168. The firm expects an upside to Westlake Corporation (NYSE:WLK)’s current valuation, considering that its significant cash balance offers an opportunity for either expansion of the Housing & Infrastructure Products portfolio through marketing and acquisitions or higher return of cash to shareholders. As of September 30, 2024, the company had cash and cash equivalents of $2.91 billion.

Westlake Corporation (NYSE:WLK)’s Housing and Infrastructure Products business is expected to outperform the broader building products market. This outperformance is expected to be mainly driven by national scale and product breadth, and integrated PVC dynamics. This business, which includes building products and related materials, relies on the performance of the broader housing market activity. With the increase in housing starts and renovation activities, the demand for Westlake Corporation (NYSE:WLK)’s products including PVC pipes and windows is expected to improve.

This can result in increased sales volumes and potentially improved pricing power. Furthermore, a housing market recovery can have positive spillover effects on Westlake Corporation (NYSE:WLK)’s Performance and Essential Materials business. Notably, higher demand for PVC in construction can mitigate some of the challenges in the chemical sector, resulting in improved margins.