We recently published a list of 11 Undervalued Chemical Stocks to Buy Now. In this article, we are going to take a look at where Axalta Coating Systems Ltd. (NYSE:AXTA) stands against other undervalued chemical stocks to buy now.
President Trump is looking to place 25% tariffs on goods from Canada and Mexico and this could negatively influence US industries and critical sectors beyond just autos. According to a report by CNBC in January 2025 by Lori Ann LaRocco, Canada is the largest partner with the US for critical chemicals.
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The US chemicals industry also exports a huge amount of products to Canada. In 2023, US firms sold over $28 billion in chemicals to Canadian customers. On the other hand, Canadian partners export approximately $25 billion in chemicals to the US annually, as per the American Chemistry Council.
Texas, California, Louisiana, North Carolina, Illinois, Ohio, Indiana, New York, Pennsylvania, and Iowa are the top chemical-producing states and they account for about 66% of total US chemical production while the rest of the chemicals are imported. According to the American Chemical Council, Canada is the leading source of chemical imports to the US and accounted for 18.1% of the total chemical imports in 2023. Canada is followed by China and South Korea.
Eric Byer, CEO of the Alliance for Chemical Distribution, pointed out that if there is a trade war between Canada and the US, the price of critical chemicals could lead to inflationary pressures on US consumers and industries. According to Byer, Canada exports approximately 80% of the chlorine used in disinfecting drinking water for the West Coast states. He also pointed out that the US exports large amounts of phenol to Canada for use in the wood products industry. Some of that treated lumber is then also exported back into the US from Canada for domestic consumption and home construction purposes.
The US-Canada chemical trade relationship supports other industries as well and disruption of this trade between the two countries could have far-reaching consequences.
Our Methodology
To compile our list of the 11 undervalued chemical stocks to buy now, we looked for the largest chemical companies. We reviewed our own rankings, financial media reports, ETFs, and various online resources to compile a list of the best chemical stocks. To find undervalued chemical stocks, we narrowed down our selection by looking for stocks trading at under 20 times their forward earnings as of March 28, 2025. Next, we focused on the top 11 undervalued chemical stocks most favored by institutional investors. Data for the hedge fund sentiment surrounding each stock was taken from Insider Monkey’s Q4 2024 database of more than 1,000 elite hedge funds. Finally, the 11 undervalued chemical stocks to buy were ranked in ascending order based on the number of hedge funds holding stakes in them as of Q4 2024.
Why do we care about what hedge funds do? 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 worker in a paint manufacturing plant wearing a protective suit and mask.
Axalta Coating Systems Ltd. (NYSE:AXTA)
Forward P/E: 12.89
Number of Hedge Fund Holders: 49
Axalta Coating Systems Ltd. (NYSE:AXTA) is an American specialty chemicals and materials company that provides coatings for light vehicles, commercial vehicles, refinish applications, building facades, and other industrial applications. With its coating solutions, application systems, and technology, the company serves customers belonging to various industries in more than 140 countries around the world. Axalta Coating Systems Ltd. (NYSE:AXTA) ranks among the best chemical stocks to invest in.
The company reported record Q4 net sales of $1.3 billion in Q4 2024 and record full-year net sales of $5.3 billion in 2024. This performance was partly driven by strategic investments that Axalta Coating Systems Ltd. (NYSE:AXTA) made to grow its Refinish business. In July 2024, Axalta Coating Systems Ltd. (NYSE:AXTA) announced the completion of its acquisition of the CoverFlexx group, which specializes in coatings for automotive refinish and aftermarket applications for economy customers in North America. This acquisition enhanced the company’s product offerings in Refinish coatings by adding a range of primers, basecoats, clearcoats, aerosols, fillers, bed liners, detailing products, and paint shop accessories. Axalta Coating Systems Ltd. (NYSE:AXTA) is now better positioned to serve the economy segment with excellent offerings.
Overall, AXTA ranks 2nd on our list of undervalued chemical stocks to buy now. While we acknowledge the potential of AXTA, our conviction lies in the belief that some 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 AXTA 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.
