Huntsman (HUN) Stock Up 20% in 3 Months: What’s Driving It?

Huntsman Corporation’s HUN shares have popped 19.9% over the past three months. The company has also outperformed its industry’s rise of 16% to over the same time frame.

Huntsman, a Zacks Rank #3 (Hold) stock, has a market cap of roughly $4.9 billion and average volume of shares traded in the last three months is around 1,939.6K. The company has an expected long-term earnings per share growth rate of 5.4%.

Let’s delve deeper into the factors behind the stock’s price appreciation.

What’s Favoring the Stock?

Better-than-expected earnings performance in the second quarter has contributed to the gain in Huntsman’s shares. The company delivered an earnings surprise of 30% in the second quarter. Huntsman, in its second-quarter call, said that is seeing improving trends within most of its key markets.

Huntsman is benefiting from its investment in downstream businesses and differentiated product innovation. It remains focused on growing its downstream specialty and formulation businesses and is shifting its MDI (methylene diphenyl diisocyanate) business from components to differentiated systems that typically have higher margins and lower volatility.

The company’s Polyurethanes segment is well placed for strong upside in the long term on the back of its focus on ramping up its high-value differentiated downstream portfolio. Substitution of MDI for less effective materials will remain a key driving factor for the MDI business.

Moreover, Huntsman should gain from synergies of strategic acquisitions. The buyout of Demilec, a leading manufacturer and distributor of spray polyurethane foam (“SPF”) insulation systems in North America, is expected to offer significant synergies.

Moreover, the acquisition of Icynene-Lapolla, a leading North American manufacturer and distributor of SPF, is in line with Huntsman’s strategy of expanding its downstream polyurethanes business. The combination of Icynene-Lapolla with Demilec is expected to create the world’s leading supplier of spray foam products.

The company, in May 2020, also completed the acquisition of CVC Thermoset Specialties, a North American specialty chemical producer that serves industrial composites, adhesives and coatings markets. The buyout is in sync with the company’s strategy of expanding its specialty Advanced Materials portfolio.

Huntsman, last month, said that the integration of CVC Thermoset Specialties and Icynene-Lapolla buyouts is ahead of its plans. The company expects to achieve total annualized targeted synergies of $35 million for these acquisitions by the end of 2021.

Stocks to Consider

Better-ranked stocks worth considering in the basic materials space include Barrick Gold Corporation GOLD, Yamana Gold Inc. AUY and Eldorado Gold Corporation EGO.

Barrick Gold has a projected earnings growth rate of 80.4% for the current year. The company’s shares have gained around 51% in a year. It currently has a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Yamana Gold has a projected earnings growth rate of 76.9% for the current year. The company’s shares have rallied roughly 69% in a year. It currently carries a Zacks Rank #2 (Buy).

Eldorado Gold has an expected earnings growth rate of 2,325% for the current year. The company’s shares have gained around 24% in the past year. It presently carries a Zacks Rank #2.

5 Stocks Set to Double

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