The Chemours Company
’s
CC
shares have popped roughly 25% over the past three months. The company is benefiting from a recovery in demand from the coronavirus-induced slowdown and its cost-reduction measures.
We are positive on the company’s prospects and believe that the time is right for you to add the stock to the portfolio as it looks promising and is poised to carry the momentum ahead.
Chemours currently carries a Zacks Rank #2 (Buy) and a
VGM Score
of B. Our research shows that stocks with a VGM Score of A or B, combined with a Zacks Rank #1 (Strong Buy) or 2, offer the best investment opportunities for investors.
Let’s see what makes this chemical maker an attractive investment option at the moment.
An Outperformer
Shares of Chemours have shot up 71% over the past six months against the 23.4% rise of its
industry
. It has also outperformed the S&P 500’s 19.9% rise over the same period.
Estimates Moving Up
Earnings estimate revisions have the greatest impact on stock prices. Over the past month, the Zacks Consensus Estimate for Chemours for the current year has increased around 10.7%. The consensus estimate for 2021 has also been revised 19.3% upward over the same time frame.
Positive Earnings Surprise History
Chemours has outpaced the Zacks Consensus Estimate in each of the trailing four quarters. In this time frame, it has delivered an earnings surprise of 54.1%, on average.
Attractive Valuation
Valuation looks attractive as Chemours’ shares are currently trading at a level that is lower than the industry average, suggesting that the stock still has upside potential.
Going by the EV/EBITDA (Enterprise Value/ Earnings before Interest, Tax, Depreciation and Amortization) multiple, which is often used to value chemical stocks, Chemours is currently trading at trailing 12-month EV/EBITDA multiple of 7.06, cheaper compared with the industry average of 9.66.
Superior Return on Equity (ROE)
ROE is a measure of a company’s efficiency in utilizing shareholder’s funds. ROE for the trailing 12-months for Chemours is 43.6%, above the industry’s level of 9%.
Upbeat Prospects
Chemours delivered better-than-expected results in the third quarter on the back of demand recovery, cost-cutting actions and strong execution. In its Fluoroproducts segment, the company is seeing improved customer demand for refrigerants, especially in the automotive sector on a rebound in automotive OEM production rates. It is also witnessing demand recovery in architectural coatings, laminates and plastics markets in its Titanium Technologies segment. The company is seeing a recovery across all markets and regions.
Chemours is also poised to benefit from increasing adoption of the Opteon platform and growing applications of fluoropolymers, especially in automotive, electronics and energy end-markets. The company is seeing higher demand for Opteon in mobile applications. It remains committed to drive Opteon adoption. It is ramping up production at the new low-cost Opteon Corpus Christi facility.
Moreover, the company stands to gain from its efforts to reduce costs. It is taking actions to cut costs by reducing overhead, discretionary spend and capital expenditure for 2020. These actions are helping it to generate strong cash flows. Chemours aims to cut costs by $160 million and capital expenditure by roughly $125 million in 2020. The company’s cost and operational improvement actions across its businesses are expected to support margins in 2020.
The company also has a strong liquidity position. It ended the third quarter with cash and cash equivalents of $956 million and total liquidity of $1.7 billion.
The Chemours Company Price and Consensus
The Chemours Company price-consensus-chart
|
The Chemours Company Quote
Other Stocks to Consider
Other top-ranked stocks worth considering in the basic materials space include
BHP Group
BHP
,
Silvercorp Metals Inc.
SVM
and
Pretium Resources Inc.
PVG
.
BHP Group has a projected earnings growth rate of 31.3% for the current fiscal year. The company’s shares have gained around 12% in a year. It currently sports a Zacks Rank #2. You can see
the complete list of today’s Zacks #1 Rank stocks here
.
Silvercorp has an expected earnings growth rate of 40% for the current fiscal. The company’s shares have gained around 24% in the past year. It currently carries a Zacks Rank #2.
Pretium Resources has an expected earnings growth rate of 25.5% for the current year. The company’s shares have gained around 13% in the past year. It currently carries a Zacks Rank #2.
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