The Chemours Company
’s
CC
shares have shot up roughly 33% over the past three months. It is gaining from a rebound in demand from the coronavirus-induced slowdown and its cost-cutting actions.
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 sports a Zacks Rank #1 (Strong 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 or 2 (Buy), offer the best investment opportunities for investors.
Let’s see what makes this chemical maker an attractive investment option at the moment.
Price Performance
Shares of Chemours have surged 48.8% year to date against the 9.8% rise of its
industry
. It has also outperformed the S&P 500’s 14.2% rise over the same period.
Estimates Northbound
Over the past two months, the Zacks Consensus Estimate for Chemours for the current year has increased around 10.7%. The consensus estimate for 2021 has also been revised 26.6% upward over the same time frame. The favorable estimate revisions instill investor confidence in the stock.
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 7.31, cheaper compared with the industry average of 9.77.
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 46.3%, above the industry’s level of 9%.
Growth Drivers in Place
Chemours is benefiting from a recovery in demand across its markets, cost-management initiatives 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.
Chemours is also benefiting 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 its margins.
The Chemours Company Price and Consensus
The Chemours Company price-consensus-chart
|
The Chemours Company Quote
Stocks to Consider
Other top-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 43.5% for the current year. The company’s shares have gained around 12% in the past year. It currently carries a Zacks Rank #1. 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 31% in the past year. It currently carries a Zacks Rank #1.
BHP Group has a projected earnings growth rate of 43.3% for the current fiscal year. The company’s shares have gained around 19% in a year. It currently carries a Zacks Rank #2.
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