UBS’ Top Quant Stocks In AI, IT, Healthcare & Other Sectors: Top 33 Stocks In All Sectors

15. Eastman Chemical Company (NYSE:EMN)

Number of Hedge Fund Investors In Q2 2024: 28

Sector: Materials

Eastman Chemical Company (NYSE:EMN) is one of the biggest chemical companies in the world. This enables it to have a diversified business model that caters to the needs of several industries such as aviation, pharmaceutical, construction, and agriculture. Yet, even though it has a diversified customer base, the industrial nature of its products naturally leaves Eastman Chemical Company (NYSE:EMN) exposed to the broader economy. Consequently, the fact that its shares are up a modest 13.9% year to date is unsurprising. Eastman Chemical Company (NYSE:EMN) does have some interesting long-term catalysts. One of these is the firm’s push towards recycled polyester which can help it capture demand from big-ticket firms like Pepsi. A tight global economic environment has forced Eastman Chemical Company (NYSE:EMN) to cut costs though with a $200 million cost reduction plan in play. The stock’s future depends on several factors such as economic conditions in Europe and China and the state of the ongoing de-stocking in the industry.

The inventory concerns were also on Eastman Chemical Company (NYSE:EMN)’s management’s mind during the Q2 2024 earnings call:

“So when you look at sort of where we are with the Tritan market, a lot of that goes in consumer durables as everyone I think in the industry has called out that market’s been weak. It continues to be weak. But we did see a significant amount of return in volume with the end of destocking. So a huge amount of the hit that we took in 2023 was associated with destocking. That volume has come back and the very high margins that go with it are certainly very helpful this year and will be going forward. We also continue to have a lot of wins just on the traditional value proposition of Tritan. So when you look at the compelling attributes of its heat resistance, its chemical resistance, its clarity, it being a safe product that’s BPA free.

We’ve always had a lot of volume wins in applications that’s driven tremendous growth in this product area for over a decade. That engine’s back in gear this year. We’re winning on those value propositions a variety of places on top of end of destocking that’s giving us good momentum. And then on top of that, we’re now layering on recycled content. And for a lot of brands, that’s really important. We have a lot of customers that have been with us for a long time that are using this recycled content claim as a way to enhance their product offering or drive new volume growth like P&G, NowGene, [indiscernible], LVMH, and L’Oreal, Estee Lauder, etc. You’ve seen the icon chart of all the customers we’ve had who are using in one form or another. And then we’ve — what’s really exciting is also opening up new markets for us to serve that wouldn’t have originally been available for our value proposition.”