Materials Sector Earnings Outperform: 5 Stocks Ready to Follow Suit

This article was originally published on Finbox.io. 

The new earnings season has officially begun and as expected, has been a story of growth so far. According to Zack’s Investment Research, 57 members of the S&P 500 have reported as of Wednesday, April 19th. Total earnings from these companies have grown 18.7 percent in Q1'17 compared to 11.0 percent in Q4'16. Revenues are also up 6.4 percent in Q1'17 compared to 3.7 percent in Q4'16. Additionally, 75 percent of these companies have also beat their EPS estimates. Overall, S&P 500 member earnings are on pace to reach their highest level in nearly two years.

While only 11 percent of the S&P 500 member companies have reported, one sector that has outperformed has been materials. So far these companies have reported total earnings growth of 31.6 percent on 12.0 percent revenue growth while 100 percent have beat their estimates. These materials stocks have seen a positive 1.1 percent price impact immediately following earnings which compares favorably to the -0.6 percent impact for the entire 57 company group that has reported thus far.

Here are five stocks in the materials sector that are fundamentally undervalued and ready to takeoff on earnings.

5 Materials Stocks That Could Takeoff On Earnings

Using this stock screen, we found five materials stocks expected to report earnings this week (4/24 - 4/28) that are trading below their finbox.io fair value estimate: Allegheny Technologies Incorporated ATI, Owens-Illinois Inc OI, Carpenter Technology Corporation CRS, Coeur Mining Inc CDE and Huntsman Corporation HUN.

Huntsman manufactures and sells differentiated organic and inorganic chemical products worldwide. The company recently announced the spin-off of its pigments & additives segment on September 7, 2016 which is expected to close in the first half of this year. The reasoning for the spin-off is that Venator Materials (SpinCo) is expected to command a higher valuation

These stocks in the materials sector all have strong fundamentals and could easily trade higher following a positive earnings announcement.

If the first week of the Q1'17 earnings season is any indicator for how the materials sector is going to fare, investors may want to take a closer look at these names prior to them reporting.