In this article, we discuss 12 best US chemical stocks to buy now. If you want to see more stocks in this selection, check out 5 Best US Chemical Stocks To Buy Now.
In 2023, the economic situation is expected to decline, resulting in a decrease in demand for most chemical products, particularly due to high feedstock and energy expenses. Additionally, increased supply from significant capacity expansions in Asia will contribute to global pressure on chemical margins. This competition was previously absent in 2021 and the first half of 2022, but has resurfaced due to reduced freight costs from Asia. The impact of these trends will differ based on region, with European producers being most affected by high regional energy costs, while US and Middle Eastern producers are anticipated to continue benefiting from lower domestic gas prices. Downstream chemical markets are in for a complex start this year, with polymer and fibre demand relatively weak in the first half, particularly due to startling inflation across Europe and the United States. Similarly, the easing of the Zero Covid policy in China will still result in a sluggish recovery of the economy, impacting demand and supply.
On February 16, Mark Newman, CEO of chemical company The Chemours Company (NYSE:CC), joined Brian Sullivan and the ‘CNBC Special: Taking Stock’, and pointed out that the new energy technologies like windmills, electric cars, and hydrogen-based machinery cannot be functional without traditional chemical elements and components. He said that chemistry is the heart of material science, and material science powers clean energy and the energy transition. To bolster his stance, Newman noted that artificial intelligence is the latest trend, which is enabled by semiconductors, which are in turn manufactured by important chemical polymers. He emphasized how critical the chemical industry is to the greater material science industry. With its focus on US manufacturing, The Chemours Company (NYSE:CC) greatly benefited from the dramatic drop in natural gas prices.
European chemical manufacturers expressed a pessimistic outlook for 2023, attributing it to the ongoing impact of Russia’s invasion of Ukraine, elevated inflation, and a decelerating economy. Clariant, a Swiss company whose chemicals are utilized in household and personal care items, predicted a drop in sales for 2023, primarily due to an increase in energy costs. Additionally, German chemical producer Covestro’s shares decreased by 5% on March 2, following the announcement that it anticipates earning less profit in 2023 than the previous year. However, in this article, we discuss the best US chemical stocks to invest in. Some of the top American chemical producers include Air Products and Chemicals, Inc. (NYSE:APD), Dow Inc. (NYSE:DOW), and The Chemours Company (NYSE:CC).
Our Methodology
For this article, we shortlisted US-based chemical companies and selected the following chemical stocks based on overall hedge fund sentiment toward each stock. We have assessed the hedge fund sentiment from Insider Monkey’s database of 943 elite hedge funds tracked as of the end of the fourth quarter of 2022. The list is arranged in ascending order of the number of hedge fund holders in each firm.
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Best US Chemical Stocks To Buy Now
12. Origin Materials, Inc. (NASDAQ:ORGN)
Number of Hedge Fund Holders: 22
Origin Materials, Inc. (NASDAQ:ORGN) specializes in materials that have a negative impact on carbon emissions. It uses its own platform technology to transform plant-based carbon or biomass into various product intermediates such as chloromethylfurfural and hydrothermal carbon. The company is based in West Sacramento, California. On February 23, Origin Materials, Inc. (NASDAQ:ORGN) reported a Q4 GAAP EPS of $0.11, beating market estimates by $0.20. Cash, cash equivalents and marketable securities were $323.8 million as of December 31, 2022. The expected revenue for FY23 is between $40 million to $60 million, versus a consensus of $55.52 million.
On October 14, Credit Suisse analyst John Roberts initiated coverage of Origin Materials, Inc. (NASDAQ:ORGN) with an Outperform rating and a $7 price target. He believes that the company poses a significant challenge to established chemical businesses by providing a more sustainable alternative. Roberts also mentioned that Origin Materials, Inc. (NASDAQ:ORGN) has a manufacturing platform that could be used for other products in the future and a valuable R&D program that may have potential for other markets. The analyst added that the company has focused on creating products for the near term.
According to Insider Monkey’s fourth quarter database, 22 hedge funds were long Origin Materials, Inc. (NASDAQ:ORGN), compared to 23 funds in the prior quarter.
Like Air Products and Chemicals, Inc. (NYSE:APD), Dow Inc. (NYSE:DOW), and The Chemours Company (NYSE:CC), Origin Materials, Inc. (NASDAQ:ORGN) is one of the best chemical stocks to invest in.
11. Green Plains Inc. (NASDAQ:GPRE)
Number of Hedge Fund Holders: 24
Green Plains Inc. (NASDAQ:GPRE) manufactures low-carbon fuels worldwide, and it operates through three segments – Ethanol Production, Agribusiness and Energy Services, and Partnership. It was established in 2004 and is headquartered in Omaha, Nebraska. On February 8, Green Plains Inc. (NASDAQ:GPRE) reported its Q4 results. The company announced a GAAP loss per share of $0.66, beating Wall Street estimates by $0.40. The revenue of $914.04 million climbed 13.9% year-over-year, outperforming market consensus by $19.62 million. It is one of the best US chemical stocks to invest in.
On February 9, Eric Stine, an analyst at Craig-Hallum, increased the firm’s price target on Green Plains Inc. (NASDAQ:GPRE) from $44 to $49 and maintained a Buy rating on the shares. Despite Green Plains Inc. (NASDAQ:GPRE)’s Q4 results being better than Q3, they were mixed and resulted in EBITDA and EPS falling below expectations, according to the firm. Craig-Hallum believes that Q4 shows why Green Plains Inc. (NASDAQ:GPRE) is implementing its Total Transformation plan, which involves transitioning from a conventional ethanol to a more sustainable biorefinery platform.
According to Insider Monkey’s fourth quarter database, 24 hedge funds were long Green Plains Inc. (NASDAQ:GPRE), compared to 21 funds in the earlier quarter. Mike Masters’ Masters Capital Management is a prominent stakeholder of the company, with 800,000 shares worth $24.4 million.
10. Huntsman Corporation (NYSE:HUN)
Number of Hedge Fund Holders: 26
Huntsman Corporation (NYSE:HUN) was founded in 1970 and is based in The Woodlands, Texas. The company manufactures and distributes diversified organic chemical products worldwide. The company operates through three segments – Polyurethanes, Performance Products, and Advanced Materials. On February 20, Huntsman Corporation (NYSE:HUN) declared a $0.2375 per share quarterly dividend, an 11.8% increase from its prior dividend of $0.2125. The dividend is payable on March 31, to shareholders of record on March 15. It is one of the best chemical stocks to monitor.
On February 23, RBC Capital analyst Arun Viswanathan maintained a Sector Perform rating on Huntsman Corporation (NYSE:HUN) and lowered the firm’s price target on the shares to $30 from $33. This is due to the company’s earnings miss in Q4 and below-expectation Q1 guidance. The analyst also mentioned that demand is weak. However, RBC Capital may become more optimistic if the fundamentals and Chinese economy improve during the second half of the year.
According to Insider Monkey’s Q4 data, 26 hedge funds were bullish on Huntsman Corporation (NYSE:HUN), compared to 32 funds in the prior quarter. Cliff Asness’ AQR Capital Management is the largest position holder in the company, with 3.30 million shares worth $90.7 million.
Here is what Madison Small Cap Fund has to say about Huntsman Corporation (NYSE:HUN) in its Q4 2020 investor letter:
“We have increased our exposure modestly to several industrial and materials names that we believe should benefit from the reopening of the economy in 2021. One such name is Huntsman Corporation (HUN); a company we have followed for more than 15 years and have never owned before. Huntsman Corporation is a global producer of organic chemicals. The company was founded by well-known businessperson and political figure, Jon Huntsman, in 1970 and has grown through its history into a diversified portfolio of chemical businesses Our interest in Huntsman coincides with the current trough conditions in the global economy due to the Covid-19 recession. The company’s end markets are cyclical and demand for their products is highly price elastic. Additionally, the advanced materials business suffered due to the exposure to the aerospace original equipment manufacturer (OEM) down cycle. Despite these challenges, we believe management has executed well; no surprise, given their track record. We think Earnings before interest, taxes, and amortization (EBITDA) troughed in the second quarter and are heartened by the lack of further deterioration in 3Q and 4Q. Looking to the future, we see an intriguing reflation opportunity driven by the resumption of economic activity in late 2021. Further, we posit that the easy monetary policy, that has characterized this cycle, has inflationary side effects which would benefit a basic materials producer such as HUN. The company has also been moving downstream to more value-added businesses, which may drive EBITDA multiple expansion in the future.”
9. Tronox Holdings plc (NYSE:TROX)
Number of Hedge Fund Holders: 28
Tronox Holdings plc (NYSE:TROX) produces TiO2 pigment in North America, South and Central America, Europe, the Middle East, Africa, and the Asia Pacific. The company is vertically integrated and operates mines that contain titanium-bearing mineral sand. It also undertakes beneficiation and smelting operations. Tronox Holdings plc (NYSE:TROX)’s products are utilized in the manufacturing of coatings, paints, plastics, paper, and other applications. The company is headquartered in Stamford, Connecticut. On February 22, Tronox Holdings plc (NYSE:TROX) declared a quarterly dividend of $0.125 per share, in line with previous. The dividend is distributable on April 6, to shareholders of record on March 6. It is one of the best chemical stocks to invest in.
On February 17, Deutsche Bank raised the firm’s price target on Tronox Holdings plc (NYSE:TROX) to $18 from $16 and kept a Buy rating on the shares following the Q4 results.
According to Insider Monkey’s Q4 data, 28 hedge funds were bullish on Tronox Holdings plc (NYSE:TROX), compared to 31 funds in the prior quarter. Jonathan Barrett and Paul Segal’s Luminus Management is the largest stakeholder of the company.
8. LSB Industries, Inc. (NYSE:LXU)
Number of Hedge Fund Holders: 28
LSB Industries, Inc. (NYSE:LXU) was incorporated in 1968 and is headquartered in Oklahoma City, Oklahoma. LSB Industries, Inc. (NYSE:LXU) produces and sells chemical products. It offers nitrogen-based fertilizers, including ammonia, fertilizer-grade ammonium nitrate, and urea ammonia nitrate for different applications, such as fertilizer blends for corn and other crops, as well as NPK fertilizer blends. It is one of the best chemical stocks to monitor.
On March 14, Deutsche Bank analyst David Begleiter initiated coverage of LSB Industries, Inc. (NYSE:LXU) with a Buy rating and a $16 price target, implying upside of 40%. According to the analyst, even with the significant drop in European gas prices over the past five months, LSB Industries, Inc. (NYSE:LXU) and other nitrogen peers in the U.S. still have a substantial cost advantage compared to European producers. This is because 20%-30% of European producers are still offline due to their higher structural gas prices, the analyst wrote in a research note.
According to Insider Monkey’s fourth quarter database, 28 hedge funds were long LSB Industries, Inc. (NYSE:LXU), compared to 23 funds in the earlier quarter. Jeffrey Gendell’s Tontine Asset Management is the biggest stakeholder of the company, with 2.3 million shares worth $31 million.
7. The Chemours Company (NYSE:CC)
Number of Hedge Fund Holders: 29
The Chemours Company (NYSE:CC) was incorporated in 2014 and is headquartered in Wilmington, Delaware. The company provides performance chemicals in North America, the Asia Pacific, Europe, the Middle East, Africa, and Latin America. It operates through three business divisions – Titanium Technologies, Thermal & Specialized Solutions, and Advanced Performance Materials. On February 9, The Chemours Company (NYSE:CC) reported a revenue of $1.3 billion, beating Wall Street estimates by $30 million. The free cash flow came in at more than $350 million at the conclusion of December 2022. The Chemours Company (NYSE:CC) is one of the top chemical stocks to consider.
On February 13, Arun Viswanathan, an analyst at RBC Capital, increased the firm’s price target on The Chemours Company (NYSE:CC) from $33 to $36. However, he maintained a Sector Perform rating on the shares following the company’s Q4 earnings miss. The analyst explained that the results were affected by lower fixed cost absorption in TiO2, which is expected to improve by 2023 due to the recovery in China and Europe. Nevertheless, the firm is cautious about some macro uncertainties in TiO2 demand from coatings and electronics markets.
According to Insider Monkey’s fourth quarter database, 29 hedge funds were bullish on The Chemours Company (NYSE:CC), compared to 36 funds in the prior quarter. AQR Capital Management is the biggest stakeholder of the company.
Miller Value Partners made the following comment about The Chemours Company (NYSE:CC) in its Q3 2022 investor letter:
“The Chemours Company (NYSE:CC) dropped 22.5% in the period. Chemours reported 2Q22 revenue of $1.92 billion, +15.7% Y/Y, ahead of consensus of $1.84 billion, and Adjusted EPS of $1.89, +57.5% Y/Y, ahead of analyst expectations for EPS of $1.43. Adjusted EBITDA for the quarter came in at $475 million, or a margin of 24.8%, +269bps Y/Y, ahead of consensus of $405.8 million. After initially raising guidance following the 2Q22 earnings beat, management revised FY22 Adjusted EBITDA guidance from $1.48-1.58B to $1.40-1.45B, -6.9% at the respective midpoints, but +9.0% Y/Y. Management noted that the revised guidance was driven by weakness in the company’s titanium technologies segment, characterized by lower demand, especially in Europe and Asia, combined with high input costs. The company guided for FY22 FCF in excess of $575MM (14.0% FCF Yield) as a result of actions taken to reduce FY22 capex from $400MM to $350MM, while also continuing to invest in growth and sustainability initiatives.”
6. Celanese Corporation (NYSE:CE)
Number of Hedge Fund Holders: 31
Celanese Corporation (NYSE:CE) was founded in 1918 and is headquartered in Irving, Texas. It is a chemical and specialty materials company that manufactures and commercializes high performance engineered polymers in the United States and internationally. On February 23, Celanese Corporation (NYSE:CE) announced that it will undertake two joint ventures with Mitsui in order to expand their long-standing partnership. According to the announcement, Celanese Corporation (NYSE:CE) has signed a term sheet to create a Food Ingredients JV with Mitsui, under which the company will contribute its food ingredients business, including assets, technology, and employees, to form a separate Food Ingredients JV. Celanese will keep a 30% stake in the JV, while Mitsui will purchase a 70% stake. The deal is expected to be completed in Q3 2023.
BofA analyst Matthew DeYoe reinitiated coverage of Celanese Corporation (NYSE:CE) on February 25th and upgraded the stock from Neutral to Buy with a new price target of $140, up from $135. Despite a difficult Q4 and a weaker outlook, the analyst is optimistic about the company’s future, citing better-than-expected acetyl prices in the U.S. and an increasingly favorable risk-reward profile for the stock.
According to Insider Monkey’s fourth quarter database, 31 hedge funds were bullish on Celanese Corporation (NYSE:CE), compared to 36 funds in the prior quarter. Warren Buffett’s Berkshire Hathaway is the biggest stakeholder of the company.
Like Air Products and Chemicals, Inc. (NYSE:APD), Dow Inc. (NYSE:DOW), and The Chemours Company (NYSE:CC), Celanese Corporation (NYSE:CE) is one of the best chemical stocks to monitor.
Here is what Vltava Fund has to say about Celanese Corporation (NYSE:CE) in its Q1 2022 investor letter:
“We then used the money freed up to, among other things, open three new positions. The stock price declines during the Russian invasion brought a lot of good prices to the market. Out of all the possibilities we considered, we picked the stocks of Celanese (CE).
Celanese is the world’s largest producer of acetic acid and its chemical derivatives, including vinyl acetate monomers and emulsions. Their applications are used in a wide range of industries, such as automotive tobacco, coatings, construction, energy, telecommunications, food, and medical. Celanese recently closed the acquisition of a large part of DuPont’s business, which will make Celanese an even bigger player in the industry while reducing the cyclicality of its business. The acquisition is quite large and should deliver significant value to shareholders that in our view is not at all presently reflected in the share price. Celanese is a business that stands more or less aside from the main interests of most investors, but it is a company with very high returns on capital, strong free cash flow, and historically very efficient resource allocation.”
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Disclosure: None. 12 Best US Chemical Stocks To Buy Now is originally published on Insider Monkey.
