In this article, we will discuss the 12 Best Chemical Stocks to Buy According to Analysts.
PwC believes that Chemicals M&A deal value and volume demonstrated signs of a rebound in H2 2024. This was due to numerous factors, such as central banks cutting rates, moderation of inflation and the broader destocking trend starting to subside. The firm expects chemical deal activity to further rebound in H1 2025 due to the easing of economic and political uncertainties across major countries.
Notably, a renewed emphasis on domestic industrial policy and global supply chain realignment, together with higher private equity exits, are expected to result in more assets in the market, fueling the deal activity. David Yankovitz, the US Chemicals Market Leader at Deloitte, believes that the 2025 outlook for the broader chemical sector demonstrates a transition to a high-tech, low-carbon future.
Growth Drivers for Chemicals Industry
The American Chemistry Council (ACC) anticipates a 1.9% rebound in chemical volumes in 2025 after 2 consecutive years of declines as the US economy continues to undergo a soft landing and the housing market witnesses improvement in H2 of the year. Martha Moore, chief economist at the ACC, expects that the US Fed rate cuts will stimulate demand for durable goods and investment. Moore also expects an improvement in manufacturing and industrial production globally in 2025, which can help US exports. That being said, the trade policy is uncertain with the threat of tariffs by the Trump administration.
Amidst the challenges, the economist expects a recovery in demand for the US chemicals, although a modest one, in 2025, which will be weighted towards H2 2025 as the lag effects of the rate cuts take hold.
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Transformative Trends Affecting the Chemicals Sector
David Yankovitz expects an improvement in operational excellence via cost-reduction programs and asset rationalization. Amidst the fluctuating market conditions, several chemical companies continue to emphasize cost-effectiveness. With the help of strategic cost-reduction programs and asset rationalization, companies have been striving to improve operational effectiveness. The chemical companies tend to navigate uneven growth throughout several end markets. With a strong focus on high-growth sectors like semiconductors and clean energy, companies have been positioning themselves to capitalize on such opportunities.
Apart from these trends, Yankovitz believes that innovation remains critical for advancing the chemical industry. Organizations continue to invest in enhancing their product offerings, optimizing manufacturing processes, and collaborating throughout ecosystems to fuel sustainability and performance. Such a comprehensive approach to innovation might help businesses cater to the changing market demands. Notably, it also helps prepare for leadership in a low-carbon, high-tech future.
Amidst these factors, let us now have a look at the 12 Best Chemical Stocks to Buy According to Analysts
A close up of a laboratory beaker filled with colorful chemicals, signifying the company’s specialty chemicals.
Our Methodology
To list the 12 Best Chemical Stocks to Buy According to Analysts, we used a screener and online rankings to shortlist the chemical stocks. Next, we chose the ones in which analysts saw upside potential. Finally, the stocks were ranked in ascending order of their average upside potential, as of 29th January. We also mentioned hedge fund sentiments around each stock, as of Q3 2024.
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12 Best Chemical Stocks to Buy According to Analysts
12) LSB Industries, Inc. (NYSE:LXU)
Average Upside Potential: 15.2%
Number of Hedge Fund Holders: 18
LSB Industries, Inc. (NYSE:LXU) is engaged in the manufacturing, marketing, and selling of chemical products. Piper Sandler analyst Charles Neivert upped the company’s price target to $12.25 from $11, keeping an “Overweight” rating. As per the analyst, the trends that have been identified demonstrate advancing tailwinds, which might strengthen grain prices and aid increased nutrient prices. In Piper’s view, such tailwinds are expected to be sustainable. LSB Industries, Inc. (NYSE:LXU) placed a strong emphasis on clean ammonia growth initiatives. Such projects remain in line with the global trend focused towards more sustainable and environmentally friendly industrial processes.
The strong performance of the nitrogen market acted as a significant tailwind for LSB Industries, Inc. (NYSE:LXU). Analysts expect that this favorable market condition might continue, offering a healthy foundation for its operations and financial results. The strong nitrogen market not only helps current operations but also lends support to LSB Industries, Inc. (NYSE:LXU)’s expansion plans in the clean ammonia sector.
Notably, the broader clean ammonia market offers a strong growth opportunity for the company. With the efforts to reduce carbon emissions intensifying, clean ammonia demand is anticipated to increase throughout several sectors, such as agriculture, transportation, and energy storage. Therefore, LSB Industries, Inc. (NYSE:LXU)’s early investments in this area might place it as a market leader, resulting in long-term contracts.
11) Methanex Corporation (NASDAQ:MEOH)
Average Upside Potential: 17.2%
Number of Hedge Fund Holders: 17
Methanex Corporation (NASDAQ:MEOH) produces and supplies methanol in China, Europe, the US, South America, South Korea, Canada, and Asia. BMO Capital Markets updated its outlook on the company’s stock, with the analyst increasing the price target from $60.00 to $65.00, offering an “Outperform” rating. The BMO Capital analyst noted numerous factors that led to the optimistic assessment. The global methanol market remains tight, which aids Methanex Corporation (NASDAQ:MEOH)’s business.
Furthermore, the recent acquisition of OCI’s methanol and ammonia assets is anticipated to be accretive to the company’s financials. To give a brief context, Methanex Corporation (NASDAQ:MEOH) announced that it has entered into a definitive agreement to acquire OCI Global’s international methanol business for $2.05 billion. The transaction consists of OCI’s interest in 2 world-scale methanol facilities in Beaumont, Texas, one of which produces ammonia. Methanex Corporation (NASDAQ:MEOH) continues to operate effectively, despite facing deteriorated gas conditions in New Zealand.
Elsewhere, Scotiabank upped the company’s price target to $66 from $60, keeping an “Outperform” rating. While Q4 witnessed soft sales, New Zealand gas sales partially offset this, says the analyst. As a leading player in the methanol market, Methanex Corporation (NASDAQ:MEOH) remains well-placed to capitalize on the favorable price trends. Its global production network enables it to leverage regional price differences and optimize its sales strategy.
10) AdvanSix Inc. (NYSE:ASIX)
Average Upside Potential: 20.8%
Number of Hedge Fund Holders: 14
AdvanSix Inc. (NYSE:ASIX) is engaged in the manufacturing and selling of polymer resins in the US and internationally. Given the improvement in nylon demand fundamentals and strong financial health, the company offers a healthy investment case. AdvanSix Inc. (NYSE:ASIX) continues to benefit from the differentiated product portfolio, its exposure to diverse end markets, and positive demand and pricing. In Q3 2024, the company capitalized on the strength of its competitive position as it saw the continued realization of commercial performance throughout its diverse product portfolio and strong operational execution.
AdvanSix Inc. (NYSE:ASIX) continues to benefit from a constructive global acetone supply and demand environment and modest improvement in North American nylon industry conditions. In Q3 2024, the company’s sales increased ~23% versus the prior year, thanks to ~11% growth in volume, 8% higher raw material pass-through pricing, and 5% favorable impact of market-based pricing. AdvanSix Inc. (NYSE:ASIX) was awarded a ~$12 million grant from the US Department of Agriculture, focused on increasing its production capacity of premium-grade products. This reinforced a strong return profile for the company’s SUSTAIN (Sustainable U.S. Sulfate to Accelerate Increased Nutrition) program.
Amidst continued strong sulfur nutrition demand, the Ammonium sulfate order book remains sold through 4Q 2024 and AdvanSix Inc. (NYSE:ASIX) expects balanced-to-tight global acetone supply and demand conditions. Furthermore, North American nylon industry spreads are expected to modestly improve amid stable end-market demand.
9) PPG Industries, Inc. (NYSE:PPG)
Average Upside Potential: 22.2%
Number of Hedge Fund Holders: 32
PPG Industries, Inc. (NYSE:PPG) is a chemical company engaged in manufacturing and distributing paints, coatings, optical products, and specialty materials. The company’s strong position in the aerospace sector is expected to act as a growth enabler. Since the global aviation industry continues to recover from the pandemic-induced slowdown, the company is expected to benefit from increased demand for aerospace coatings and materials. The advancements in high-performance coatings, specialty polymers, and sustainable materials allow PPG Industries, Inc. (NYSE:PPG) to establish next-generation products for aerospace, automotive, and industrial applications.
Furthermore, the growth in construction, automotive, and industrial manufacturing, which tend to significantly depend on specialty chemicals, can equate to increased demand for PPG Industries, Inc. (NYSE:PPG)’s coatings and protective solutions. With the scaling of chemical production, manufacturing plants, storage tanks, and industrial equipment need protective coatings to prevent corrosion. Also, PPG Industries, Inc. (NYSE:PPG)’s growth in packaging and refinish sectors provides opportunities for expansion and higher market share.
With the rebound in demand for air travel, airlines might need to increase their fleets, fueling demand for aerospace coatings. PPG Industries, Inc. (NYSE:PPG)’s innovations in aerospace coatings, like those that improve fuel efficiency or durability, might give a competitive edge and fuel adoption among aircraft manufacturers.
8) Eastman Chemical Company (NYSE:EMN)
Average Upside Potential: 24.1%
Number of Hedge Fund Holders: 26
Eastman Chemical Company (NYSE:EMN) is engaged in the business of chemicals through advanced materials, additives, specialty chemicals, and fibers, catering to end markets including automotive, construction, consumer goods, and healthcare. BofA has a positive outlook on the company. The firm believes that Eastman Chemical Company (NYSE:EMN)’s growth prospects, mainly in methanolysis, are attractive. The analysts noted the potential for revenue and earnings growth over the upcoming few years, fueled by volume growth that surpasses the company’s end markets and by methanolysis, a chemical recycling process.
Eastman Chemical Company (NYSE:EMN)’s growth strategy revolves around its commitment to circular economy solutions, mainly in plastics recycling. It continues to make progress in its methanolysis technology, which enables the recycling of polyester waste. Furthermore, it also has significant confidence in this new vector of growth, which is expected to create value moving forward. Eastman Chemical Company (NYSE:EMN) is leveraged to a macroeconomic recovery and projects generating significant EBITDA growth via its circular economy initiatives.
The company expects additional EBITDA of more than $500 million by 2029 through such initiatives. This target underlines Eastman Chemical Company (NYSE:EMN)’s commitment to sustainability and its potential to capture a share of the dynamic market for recycled materials. It anticipates generating an incremental $75 million – $100 million of EBITDA contribution in 2025 as compared to 2024 from the Kingsport methanolysis facility.
7) REX American Resources Corporation (NYSE:REX)
Average Upside Potential: 31.11%
Number of Hedge Fund Holders: 8
REX American Resources Corporation (NYSE:REX) produces and sells ethanol in the US. The company continues to progress on the expansion of its ethanol production facility at the One Earth Energy facility in Gibson City, IL. It anticipates completing the facility’s expansion in the middle of 2025, which can increase production capacity from 150 million gallons per year to 175 million gallons per year. After achieving this target, the company plans to initiate further permitting of the facility to produce 200 million gallons per year of ethanol.
REX American Resources Corporation (NYSE:REX) anticipates that this will not require additional material capital expenditures. Through the end of Q3 2024, capital expenditures associated with the One Earth Energy carbon capture and sequestration project came in at $52.9 million, and expenditures for the expansion of ethanol production capacity stood at $50.2 million. REX American Resources Corporation (NYSE:REX)’s combined capital spending of $103.1 million remains on the plan, and it is still budgeting a total spend of $165 million – $175 million for these projects.
The company continues to produce outsized positive results throughout market conditions as a result of focused ethanol production operations. As REX American Resources Corporation (NYSE:REX) emphasizes on planned increased production capacity which is expected to come online next year, it is optimistic about the expected step up in earnings potential from its expanded ethanol production operations.
6) Huntsman Corporation (NYSE:HUN)
Average Upside Potential: 31.7%
Number of Hedge Fund Holders: 31
Huntsman Corporation (NYSE:HUN) is engaged in manufacturing and selling diversified organic chemical products. The company is anticipated to benefit as a result of investment in downstream businesses, product innovation, acquisitions as well as cost actions as it continues to face challenges related to soft demand in certain markets and pricing pressure. Huntsman Corporation (NYSE:HUN) is focused on growing its downstream specialty and formulation businesses. Furthermore, the company continues to pivot its MDI (methylene diphenyl disocyanate) business from components to differentiated systems which generally have higher margins and lower volatility.
Over the medium to long term, interest rate cuts by the Fed and ECB, together with government stimulus in China, are expected to have a positive impact across the global portfolio, mainly in construction. Huntsman Corporation (NYSE:HUN) further added that it remains focused on improving its cost position and balance sheet strength in a bid to maintain optionality to invest in the core businesses in a disciplined manner. The company expressed optimism about its strong bond offering in Q3 2024, pointing to the long-term strength of the portfolio and expectation of market improvements moving forward.
Huntsman Corporation (NYSE:HUN) plans to capitalize on the growing EV battery opportunities and energy efficiency in home and building materials. The company expects that lower interest rates, announcements related to Asian stimulus, and increased political certainty in Europe and the U.S. would help improve broader market conditions.
5) Celanese Corporation (NYSE:CE)
Average Upside Potential: 35.7%
Number of Hedge Fund Holders: 15
Celanese Corporation (NYSE:CE) is a chemical and specialty materials company, focused on manufacturing and selling high-performance engineered polymers in the US and internationally. BofA upgraded the company’s shares to “Buy” from “Underperform,” offering a price target of $88. The analysts now see signs of a bottoming acetyls market and improved demand ahead, with FCF supporting leverage. As per the analyst, Celanese Corporation (NYSE:CE) can address its leverage problems without major dilutive actions.
Notably, the positive trends consist of improved demand in India and a supply response in China, with a decline in operating rates from multi-year highs. Amidst worries about supply growth impacting margin recovery, BofA expects that the worst is now over. The US Chemicals sector has an optimistic outlook, highlighting that the current headwinds might be transitory. Celanese Corporation (NYSE:CE)’s robust position in high-value, high-margin segments, like acetyls and engineered materials, can act as a key strength that can help tackle a challenging environment.
A recovery in industrial markets, mainly in the automotive and construction sectors, can offer a significant upside for Celanese Corporation (NYSE:CE). The recovery is anticipated to drive faster-than-expected earnings growth. The acquisition of DuPont’s Mobility & Materials (M&M) business can also act as a critical growth driver. The expansion of product portfolio and market presence seen through this acquisition place Celanese Corporation (NYSE:CE) as a more comprehensive solutions provider in high-growth end markets.
4) Olin Corporation (NYSE:OLN)
Average Upside Potential: 42.4%
Number of Hedge Fund Holders: 33
Olin Corporation (NYSE:OLN) manufactures and distributes chemical products in the US, Europe, Asia Pacific, Latin America, and Canada. BofA upped the company’s stock to “Buy” from “Neutral,” assigning a price target of $40. As per the analyst, the valuation is highly attractive. The analyst believes that Olin Corporation (NYSE:OLN) possesses the best FCF yield in BofA’s commodity coverage. Furthermore, the company is relatively well-insulated from the risks of the Trump administration, considering its limited exposure to China and its significant US operations.
BofA sees that the company’s EBITDA has troughed in 2024 and is expected to move higher in 2025. As a global leader in the chlor alkali sector, Olin Corporation (NYSE:OLN) has a strong market presence despite witnessing industry-wide headwinds. Its cost reduction and growth initiatives focus on bolstering its competitive position over the coming years. The company remains well-placed to capitalize on the recovery in end-market demand, mainly in the construction and manufacturing sectors.
With the improvement in utilization rates, the company’s cost reduction efforts are expected to become more impactful, resulting in margin expansion. Furthermore, a revival in the housing market, mainly due to expected interest rate cuts in 2025, can fuel demand for Olin Corporation (NYSE:OLN)’s products, mainly in chlor alkali and epoxy segments.
3) Dow Inc. (NYSE:DOW)
Average Upside Potential: 42.6%
Number of Hedge Fund Holders: 31
Dow Inc. (NYSE:DOW) is engaged in the provision of various materials science solutions for packaging, infrastructure, mobility, and consumer applications. The company focuses on $500 million – $700 million in direct cost cuts, mainly from purchased services and third-party contract labor. Amidst the challenging environment, Dow Inc. (NYSE:DOW) is expected to benefit from the completion of its near-term incremental growth projects and an improved focus on operational discipline in 2025. Furthermore, the company remains optimistic about demand growth in certain end markets, including packaging, energy, and electronics.
Overall, the company is targeting to deliver $1 billion in cost savings. These reductions came in response to ongoing macroeconomic uncertainty and will reinforce its long-term competitiveness across the economic cycle. Dow Inc. (NYSE:DOW) continues to leverage its cost-advantaged footprint in a bid to capture resilient demand for high-value applications. In December, it signed a definitive agreement for the sale of a minority stake in select US Gulf Coast infrastructure assets for anticipated cash proceeds of up to ~$3 billion.
Dow Inc. (NYSE:DOW) believes that the partnership offers a new business model focused on driving operational efficiencies and growth with new customers while offering near-term financial flexibility. The company also announced a strategic review of select European assets. All these collective actions showcase a continuation of Dow Inc. (NYSE:DOW)’s commitment to maintaining its strong financial foundation and supplementing the near-term cash flow.
2) Tronox Holdings pic (NYSE:TROX)
Average Upside Potential: 55.4%
Number of Hedge Fund Holders: 24
Tronox Holdings plc (NYSE:TROX) operates titanium-bearing mineral sand mines and beneficiation operations in Australia and South Africa. Truist Securities initiated coverage on the company’s shares, assigning a “Buy” rating and a price objective of $17.00. The analyst noted Tronox Holdings plc (NYSE:TROX)’s strong competitive position in the TiO2 industry, courtesy of its scale and high degree of vertical integration. Notably, such factors were highlighted as the critical drivers of the company’s relatively resilient margins, primarily during the recent market downturns.
The analyst from the firm remains optimistic about the TiO2 market’s improving fundamentals. Furthermore, the potential implementation of anti-dumping duties aimed at Chinese exports can bolster Tronox Holdings plc (NYSE:TROX)’s market position. Such duties might restrict competition from China, leading to above-market volume growth for the company, says the analyst. As the TiO2 market has been strengthening, Tronox Holdings plc (NYSE:TROX) is expected to be well-positioned to capitalize on the momentum.
Truist Securities expects that its operating rates will improve, which is expected to aid significant earnings upside for the company. Aristotle Capital Boston, LLC, an investment advisor, released its Q4 2024 investor letter. Here is what the fund said:
“Tronox Holdings plc (NYSE:TROX), a leading global manufacturer of titanium dioxide pigment, a key ingredient in paint, plastics and a variety of other industrial applications, was added to the portfolio. Expectations for a cyclical recovery in demand combined with a changing competitive backdrop plus the benefit of cost savings initiatives should allow TROX to produce improved financial performance over the next several years.”
1) Green Plains Inc. (NASDAQ:GPRE)
Average Upside Potential: 114.5%
Number of Hedge Fund Holders: 25
Green Plains Inc. (NASDAQ:GPRE) has grown to be a leading bio-refining company maximizing the potential of existing resources via fermentation and patented agribusiness technologies. The company’s focus on operating more efficiently and consistently, together with its proprietary technology deployments, supported driving the improved cash flow generation. Green Plains Inc. (NASDAQ:GPRE) continues to increase and diversify its customer base for high protein ingredients, both domestically and internationally.
The company’s focus is on improving its market share in the higher-value pet and international aquaculture markets, where it expects that its products have a performance edge and command a premium. Green Plains Inc. (NASDAQ:GPRE) delivered a production record of Ultra-high Protein in Q3 2024 as yields continue to improve and the company streamlines the operations of its MSC facilities. Notably, the global push for sustainable and renewable chemicals continues to create a healthy demand for bio-based alternatives to petrochemicals.
Companies looking to reduce their carbon footprint are expected to increasingly turn to corn-derived instead of fossil fuel-derived alternatives. While traditional ethanol production possesses low margins, specialty biochemicals, proteins, and renewable oils provide higher profitability. White Brook Capital Partners, an investment management firm, released its Q4 2024 investor letter. Here is what the fund said:
“Green Plains Inc. (NASDAQ:GPRE) – Green Plains was a disaster in 2024. We wrote about Green Plains travails during 2024 and activities since the last update don’t warrant another. In the end, the Biden administration was not a positive one for Ethanol producers between dragging their feet around establishing standards, not enforcing the laws on the books, and struggling to complete their mandated rule making within the same 365 days as the deadline or the date before the new standards were supposed to be implemented. Their preference for electric automobiles seemingly subsumed all other energy priorities, and ignored the world’s current condition. In the end, the Greet Model’s prescriptions which in their preliminary form betrayed ethanol producers and their expectations, came in as they should have; the Blenders Tax Credit which benefitted Chinese and Brazilian used oil salesmen gave way to the producers tax credit that benefits US farmers and ethanol producers, and the Inflation Reduction Act’s biofuel provisions are now being signalled as likely to be kept by the new administration along with a new push for 15% nationwide ethanol blend approval (delayed in the 8 states that applied for it until 2025 under Biden). In short, the turn in administration is a positive one for Ethanol and for Green Plains and the inflection in EBITDA and cash flow are on schedule for 2025. Additionally, Ancora Advisors remains as an activist investor in the Company, and we expect movement in the near term.”
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