Huntsman Corporation
’s
HUN
shares have shot up 38.3% over the past six months. The rally has resulted in the stock outperforming its
industry
’s rise of 26.7% over the same time frame. The chemical maker has also topped the S&P 500’s 20.5% rise over the same period.
Huntsman, a Zacks Rank #3 (Hold) stock, has a market cap of roughly $5.7 billion and average volume of shares traded in the last three months is around 1,676K. The company has an expected long-term earnings per share growth rate of 8.9%.
Let’s delve deeper into the factors behind the stock’s price appreciation.
What’s Going in HUN’s Favor?
Huntsman benefits from its investment in downstream businesses and differentiated product innovation. The company 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.
Huntsman’s Polyurethanes segment, which accounted for more than half of its revenues last year, is well positioned 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.
Huntsman should also 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 remains on track in integrating of two downstream acquisitions completed earlier this year and delivering more than $100 million of targeted annualized savings from its cost optimization initiative by the end of next year.
Moreover, the company recently announced an update to its fourth-quarter outlook. It now sees fourth-quarter adjusted EBITDA to exceed its prior guidance by 20-25%. The fourth-quarter adjusted EBITDA for the Polyurethanes segment is forecast to be better than third-quarter levels by at least 20%. Stronger-than-expected overall demand and higher MDI component margins have led to the increase from the previous guidance.
Huntsman Corporation Price and Consensus
Huntsman Corporation price-consensus-chart
|
Huntsman Corporation Quote
Stocks to Consider
Better-ranked stocks worth considering in the basic materials space include
Bunge Limited
BG
,
Impala Platinum Holdings Limited
IMPUY
and
BHP Group
BHP
.
Bunge has an expected earnings growth rate of 43% for the current year. The company’s shares have gained around 17% in the past year. It currently carries a Zacks Rank #1 (Strong Buy). You can see
the complete list of today’s Zacks #1 Rank stocks here
.
Impala Platinum has an expected earnings growth rate of 131.7% for the current fiscal. The company’s shares have rallied around 27% in the past year. It currently carries a Zacks Rank #1.
BHP Group has a projected earnings growth rate of 32.4% for the current fiscal year. The company’s shares have gained around 17% in a year. It currently carries a Zacks Rank #2 (Buy).
Zacks Names “Single Best Pick to Double”
From thousands of stocks, 5 Zacks experts each have chosen their favorite to skyrocket +100% or more in months to come. From those 5, Director of Research Sheraz Mian hand-picks one to have the most explosive upside of all.
You know this company from its past glory days, but few would expect that it’s poised for a monster turnaround. Fresh from a successful repositioning and flush with A-list celeb endorsements, it could rival or surpass other recent Zacks’ Stocks Set to Double like Boston Beer Company which shot up +143.0% in a little more than 9 months and Nvidia which boomed +175.9% in one year.
Free: See Our Top Stock and 4 Runners Up >>
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days.
Click to get this free report