In this article, we discuss the 5 best chemical stocks to invest in now. If you want to read our detailed analysis of these stocks, go directly to the 11 Best Chemical Stocks To Invest In Now.
5. Tronox Holdings plc (NYSE:TROX)
Number of Hedge Fund Holders: 38
In late November, UBS analyst Joshua Spector upgraded Tronox Holdings plc (NYSE:TROX) stock to Buy from Sell and raised the price target to $32 from $22, noting that new company initiatives and the prices of titanium oxide, a key product of Tronox Holdings plc (NYSE:TROX), were poised to push the share prices higher in the coming months. Potential investors should also note that strong cash flows have enabled Tronox Holdings plc (NYSE:TROX) to raise the dividend payout and authorize up to $300 million of share buybacks.
Hedge funds have been bullish on Tronox Holdings plc (NYSE:TROX) as well. Canada-based investment firm Maple Rock Capital is a leading shareholder in Tronox Holdings plc (NYSE:TROX) with 2.1 million shares worth more than $52 million.
4. Albemarle Corporation (NYSE:ALB)
Number of Hedge Fund Holders: 38
Albemarle Corporation (NYSE:ALB) is among a rare breed of chemical firms that specialize in lithium products and have strong fundamentals. The demand for lithium has skyrocketed as manufacturing firms in the electric vehicle, smartphone, and other electronic sectors seek the metal for use in key elements of their product. Lithium prices have increased because of supply chain problems as well. Albemarle Corporation (NYSE:ALB) stock stands to benefit from these twin catalysts since the demand for lithium is expected to increase further in 2022 and supply chain problems are likely to persist.
Berenberg analyst Andres Castanos-Mollor recently maintained a Buy rating on Albemarle Corporation (NYSE:ALB) stock and raised the price target to $290 from $280, underlining that the firm was achieving “solid execution” of new lithium capacity and the prices of the metal had even helped Albemarle Corporation (NYSE:ALB) deliver upgraded guidance for 2021.
In its Q3 2021 investor letter, Carillon Tower Advisers, an asset management firm, highlighted a few stocks and Albemarle Corporation (NYSE:ALB) was one of them. Here is what the fund said:
“Albemarle is a global specialty chemicals company with leading positions in lithium, bromine, and refining catalysts. The firm’s shares outperformed in the quarter, driven largely by the current robust demand environment for lithium used in the manufacturing of electric vehicle batteries. As the global push towards the reduction of carbon emissions continues to gain steam, Albemarle is well positioned to benefit from the accelerating adoption of electric vehicles.”
3. LyondellBasell Industries N.V. (NYSE:LYB)
Number of Hedge Fund Holders: 39
LyondellBasell Industries N.V. (NYSE:LYB) is one of the highest yielding chemical stocks on the market. It has registered ten consecutive years of payouts and eight consecutive years of dividend growth. On November 19, LyondellBasell Industries N.V. (NYSE:LYB) declared a quarterly dividend of $1.13 per share, in line with previous. The forward yield was close to 5%. LyondellBasell Industries N.V. (NYSE:LYB) is also working on clean energy goals to improve efficiency and the stock is trading at a bargain compared to the benefits it offers to value investors.
New York-based firm Eagle Capital Management seems to understand this and is a leading shareholder in LyondellBasell Industries N.V. (NYSE:LYB) with 3.2 million shares worth more than $302 million.
In its Q3 2021 investor letter, Miller Howard Investments, an asset management firm, highlighted a few stocks and LyondellBasell Industries N.V. (NYSE:LYB) was one of them. Here is what the fund said:
“We initiated a position in LyondellBasell (LYB). Chemical markets are currently robust given the combination of 2020 plant shutdowns and strongly recovering demand. Despite the tailwinds, Lyondell trades at a low valuation and yields just under 5%.”
2. Dow Inc. (NYSE:DOW)
Number of Hedge Fund Holders: 42
Dow Inc. (NYSE:DOW) posted earnings for the third quarter in late October, reporting earnings per share of $2.75, beating estimates by $0.19. The revenue over the period was $14.8 billion, up 53% year-on-year. The earnings beat was driven by rising demand for the commodity chemicals that Dow Inc. (NYSE:DOW) markets across different segments and regions. Dow Inc. (NYSE:DOW) expects supply chain problems to persist in 2022.
At the end of the third quarter of 2021, 42 hedge funds in the database of Insider Monkey held stakes worth $747 million in Dow Inc. (NYSE:DOW), up from 40 in the previous quarter worth $518 million.
1. DuPont de Nemours Inc (NYSE:DD)
Number of Hedge Fund Holders: 51
UBS analyst John Roberts recently raised the price target on DuPont de Nemours Inc (NYSE:DD) stock to $102 from $98 and kept a Buy rating, backing the firm to deliver stable earnings and growth in the coming years. The analyst highlighted that the firm was “significantly undervalued” with respect to specialty chemical and multi-industry peers. BMO Capital and Deutsche Bank are also constructive on DuPont de Nemours Inc (NYSE:DD).
DuPont de Nemours Inc (NYSE:DD) stock is also of interest to growth investors since the company has established itself as an important parts supplier to the tech industry over the past few years.
In its Q1 2021 investor letter, Rhizome Partners, an asset management firm, highlighted a few stocks and DuPont de Nemours Inc (NYSE:DD) was one of them. Here is what the fund said:
“We have written extensively about the anticipated DuPont’s Reverse Morris Trust merger with International Flavors and Fragrances (IFF) in January of 2021. During the quarter, DuPont shares traded up significantly in anticipation of the deal. We tendered about 40% of our DuPont shares for IFF and received about half of the allocation due to pro-ration. Investors are finally starting to appreciate DuPont’s effort to cut costs, streamline operations, and spin off companies into pure-play companies that trade at higher multiples. We are still getting used to the higher multiples that investors will pay for larger market cap and pure play companies such as DuPont.”
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