We recently published a list of 12 Best Chemical Stocks to Buy According to Analysts. In this article, we are going to take a look at where Green Plains Inc. (NASDAQ:GPRE) stands against other 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.
READ ALSO: 7 Best Stocks to Buy For Long-Term and 8 Cheap Jim Cramer Stocks to Invest In.
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.
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.
At Insider Monkey we are obsessed with 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 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
A close-up of a distiller grains bag, highlighting the company’s ethanol production process.
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.”
Overall, GPRE ranks 1st on our list of best chemical stocks to buy according to analysts. While we acknowledge the potential of GPRE as an investment, our conviction lies in the belief that some deeply undervalued AI stocks hold greater promise for delivering higher returns, and doing so within a shorter time frame. If you are looking for a deeply undervalued AI stock that is more promising than GPRE 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.
