Market Overview

Nine Attractive Chemical Stocks For 2014: Investment Idea Of The Day

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According to a report by industry trade group, The American Chemistry Council (ACC), U.S Chemicals production is expected to grow by approximately 25% over the next five years, with industry shipments increasing to $1 trillion on the back of increased natural gas production from shale and revival of demand for plastic resins and organic chemicals helped by export markets. Significant spending in general heavy industrial manufacturing during 2014 will also attract foreign-based chemical production facilities back to the U.S., driven by the availability of cheap natural gas. Production of specialty chemicals will be driven by strong demand from end-use markets, most notably light vehicles and housing. According to ACC projections, U.S. chemicals production will increase 2.5% in 2014 and 3.5% in 2015 after rising 1.6% during 2013.

According to the Chemistry Industry Association of Canada (CIAC), capital investment in Canadian chemical projects is anticipated to increase 28% in 2014 to $2.6 billion following a 20% increase in 2013, on the back of availability of relatively low-cost natural gas and natural gas liquids in North America, attractive corporate tax rates in Canada and strong demand for certain inorganic chemicals. Sales of industrial chemicals increased 6% during 2013 exceeding $27 billion, while exports increased 8%. However, CIAC anticipates that declining chemical commodity prices could drive down sales by 8% during 2014.  

Ubika Research has picked nine chemical stocks which offer an attractive investment opportunity for 2014. These stocks are estimated to report strong sales and earnings growth during 2014, according to the consensus estimates compiled by Bloomberg. Moreover, these stocks are trading at relatively low forward PE in comparison to the industry average and are expected to provide high return on equity in 2014. Additionally, these stocks are estimated to provide attractive dividend yields in 2014.  During the past three months, these stocks have registered significant gains with daily average trading volume in excess of 100,000.  

Company Name

Exchange

Ticker

Market Cap 
(BN)

Last Price

Average Volume (3-Month)

Price Change (3-Month)

Sales Growth
(2014E)

EPS Growth
(2014E)

1-Yr Forward PE ratio

Return On Equity
(2014E)

Dividend Yield 
(2014E)

CVR Partners LP

NYSE

UAN

1.3

17.71

359,764

-5.5%

3.2%

3.0%

11.2

27.5%

11.1%

A Schulman Inc

NASDAQ

SHLM

1.0

35.22

125,612

15.3%

11.2%

28.2%

16.3

13.3%

2.3%

RPM International Inc

NYSE

RPM

5.7

43.17

684,069

15.8%

6.6%

16.0%

20.4

20.3%

2.2%

Sensient Technologies Corp

NYSE

SXT

2.6

51.01

293,445

2.5%

1.4%

8.6%

18.9

11.2%

1.8%

Cabot Corp

NYSE

CBT

3.3

51.98

217,286

16.3%

7.2%

24.0%

14.2

11.6%

1.6%

Methanex Corp

TSX

MX

6.4

66.60

573,960

18.1%

13.5%

164.8%

13.0

28.4%

1.3%

HB Fuller Co

NYSE

FUL

2.6

50.82

280,149

7.3%

4.4%

16.3%

16.4

16.8%

0.8%

Cytec Industries Inc

NYSE

CYT

3.3

93.42

314,650

8.1%

11.6%

57.7%

19.6

13.4%

0.6%

Aceto Corp

NASDAQ

ACET

0.7

23.57

297,379

40.4%

10.5%

37.1%

19.3

13.5%

NA

Source: Bloomberg 
  
Company Description:

CVR Partners LP (NYSE: UAN)        
CVR Partners, LP was formed to own, operate and grow its nitrogen fertilizer business. The company's nitrogen fertilizer manufacturing facility utilizes a petroleum coke, or pet coke, gasification process to produce nitrogen fertilizer. CVR Partners facility includes an ammonia unit, an urea ammonium nitrate, or UAN, unit, and a gasifier complex.

A Schulman Inc (NASDAQ: SHLM) 
A. Schulman, Inc. supplies plastic compounds and resins which are used as raw materials by its customers. The company combines basic resins purchased from basic resin producers and enhances them with additives.  Schulman generally produces compounds to meet customer requirements and on the basis of customer commitments, but also buys and then resells prime and off-grade plastic resins.

RPM International Inc (NYSE: RPM)           
RPM International, Inc. manufactures, markets, and sells various specialty chemical product lines. The company's product lines include specialty paints, protective coatings and roofing systems, sealants and adhesives, focusing on the maintenance needs of both the industrial and consumer markets.

Sensient Technologies Corp (NYSE: SXT)  
Sensient Technologies Corporation supplies colors, flavors, and fragrances. The company manufactures a variety of ink-jet inks, cosmetic and pharmaceutical additives, and food and beverage flavors.

  Cabot Corp (NYSE: CBT)    
Cabot Corporation has businesses in chemicals, performance materials, and specialty fluids. The company manufactures and sells carbon black, fumed silica, plastics, inkjet colorants, tantalum, niobium, and germanium.  Cabot's specialty fluids business produces and markets cesium formate as a drilling and completion fluid for use in oil and gas well operations.

Methanex Corp (TSX: MX) 
Methanex Corporation produces and markets methanol. The company's methanol is used to make industrial and consumer products including windshield washer fluid, plywood floors, paint, silicone sealants and synthetic fibres.

HB Fuller Co (NYSE: FUL)  
H.B. Fuller Company manufactures and markets adhesives, sealants, coatings, paints, and other specialty chemical products worldwide. The company's products are sold in countries that include North America, Europe, Latin America, the Asia Pacific region, India, the Middle East and Africa.

Cytec Industries Inc (NYSE: CYT)    
Cytec Industries Inc. develops manufactures, and markets specialty chemicals, specialty materials, and building block chemicals. The company serves various end users including aerospace, plastics, coatings, mining, paper, water treatment, and automotive industries.

Aceto Corp (NASDAQ: ACET)         
Aceto Corporation operates as an international marketing, sales and distribution company. The company distributes industrial chemicals used in the agriculture, color producing, pharmaceutical, and surface coating industries.

The preceding article is from one of our external contributors. It does not represent the opinion of Benzinga and has not been edited.

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