We recently compiled a list of the 10 High Growth Chemical Stocks to Buy. In this article, we are going to take a look at where Air Products and Chemicals, Inc. (NYSE:APD) stands against the other high growth chemical stocks.
One of the key pillars of global manufacturing is the chemical industry. It supports a wide range of industries, including paints, coatings, plastics, specialty chemicals, petrochemicals, and agricultural chemicals. According to The Business Research Company, the chemical industry was valued at $5.6 trillion in 2024, projected to reach $6.16 trillion by 2025 at a compound annual growth rate (CAGR) of 9.7%. The primary drivers of its expansion are technological developments and the growing need for sustainable solutions, particularly in the fields of clean energy and digital transformation.
In 2024, the chemical industry showed signs of recovery as production growth surpassed 2023 levels, with demand steadily rebounding. According to Deloitte’s 2025 Chemical Industry Outlook report, this growing production trend is expected to continue into 2025. Despite the recovering production, the effects of 2023’s downturn are still being felt throughout the industry. Therefore, to counter lower revenues and margins, companies implemented cost-cutting programs in early 2024, which led to significant profit improvements.
Moreover, the chemical industry is seeing a rise in merger and acquisition (M&A) activity. A recent Insider Monkey article, citing a PwC report, stated that the value and volume of chemical M&A deals picked up in the second half of 2024. These deals were influenced by central bank rate cuts and a decrease in inflation. The momentum is expected to continue in 2025 as political and economic instability subsides.
Moving forward, cost-efficiency measures will remain a top priority, with strategies such as plant closures, workforce reductions, and asset rationalization expected to extend through 2025 and 2026. Even though major challenges persist, the industry’s efficiency strategies and resilience have set it up for a more stable future. Facing uneven market conditions, chemical companies are strategically shifting their focus toward high-growth sectors to sustain revenue and long-term growth. Accordingly, industries such as semiconductors, clean energy, and advanced materials are emerging as key priorities, offering strong demand and innovation opportunities.
As evident from the discussion above, the global chemical market is on a steady growth trajectory. This is evident through the projections that see it growing to $8.58 trillion by 2034. Furthermore, it is evident from our discussion that the companies that have been adopting cost-efficiency measures, sustainability initiatives, and strategic investments in high-demand sectors are the ones best positioned for long-term success.
Our Methodology
To compile our list of the 10 High Growth Chemical Stocks to Buy, we used the Finviz stock screener to identify publicly traded chemical companies with a market capitalization of $10 billion or higher, ensuring that only well-established industry leaders were considered.
Next, we extracted each company’s revenue for the recently completed five years. We then calculated their Compound Annual Growth Rate (CAGR) over this period, a key indicator of consistent financial performance and growth potential. Finally, we ranked the companies based on their 5-year CAGR and selected the top 10 companies with the highest growth rates.
Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 373.4% since May 2014, beating its benchmark by 218 percentage points (see more details here).
A line of workers in a refinery wearing protective suits and masks, overseeing the production process of specialty gases.
Air Products and Chemicals, Inc. (NYSE:APD)
Revenue CAGR: 6.80%
Market Capitalization: $70.33 billion
Air Products and Chemicals, Inc. (NYSE:APD) is a global supplier of atmospheric and process gases. It serves sectors such as manufacturing, chemicals, electronics, and refining. The company also designs and manufactures equipment for gas separation and liquefaction.
For the fourth quarter ended September 30, 2024, Air Products and Chemicals, Inc. (NYSE:APD) reported EPS of $8.81, which represents a 186% increase YoY. This growth was primarily due to an after-tax profit of $1.2 billion from the sale of the company’s LNG business. Similarly, adjusted EBITDA grew 12% year-over-year to $1.4 billion, while adjusted EPS increased 13% YoY to $3.56.
Throughout the year 2024, the company took strategic steps to improve its industrial gas business. It concluded the $1.81 billion sale of its LNG business to Honeywell, allowing it to shift focus toward its core activities. Furthermore, a capital investment of $70 million was made in gas separation and purification equipment, as well as the construction of air-separation machinery in Georgia and North Carolina.
Air Products and Chemicals, Inc. (NYSE:APD) also secured a 15-year contract with TotalEnergies, a petroleum and multi-energy entity, to supply 70,000 tons of green hydrogen annually. Furthermore, the company has announced plans to construct multimodal hydrogen refueling stations in California, Canada, and Europe. With higher demand for hydrogen expected in the coming years and a consistently strong core business in industrial gases, the company is on a growth trajectory.
Therefore, for 2025, Air Products and Chemicals, Inc. (NYSE:APD) aims for an adjusted EPS between $12.70 and $13.00, while capital expenditures are projected to be between $4.5 billion and $5.0 billion, primarily focused on renewable energy and hydrogen infrastructure. Thus, Air Products remains a solid option for investors seeking high-growth chemical stocks, given its strong growth prospects.
Overall APD ranks 7th on our list of the high growth chemical stocks to buy. While we acknowledge the potential of APD as an investment, our conviction lies in the belief that certain AI stocks hold greater promise for delivering higher returns, and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than APD but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. This article is originally published at Insider Monkey.