5 Reasons To Add FMC Corp. (FMC) Stock To Your Portfolio

FMC Corp.’s (NYSE:FMC) stock looks promising at the moment. The company has a market capitalization of $9.7 billion is a leading diversified chemical company that serves agricultural, industrial, environmental and consumer markets across the globe.

FMC Corp., a Zacks Rank #2 (Buy) stock, has seen its shares shoot up roughly 28% year to date. If you haven’t taken advantage of the share price appreciation yet, the time is right for you to add the stock to portfolio as it looks promising and is poised to carry the momentum ahead.

What’s Working in Favor of FMC?

An Outperformer: FMC Corp. has significantly outperformed the Zacks categorized Chemicals-Diversified industry over a year, aided by its expansion actions and strong demand across specialty end markets. Its shares gained 80.8% over this period compared with the industry’s gain of 12.7% over the same period.

Upbeat Outlook: FMC Corp. sees healthy growth in its adjusted earnings in 2017. It expects adjusted earnings in the band of $3.20 to $3.60 per share for 2017, a year over year increase of 20% at the mid-point of the guidance range. FMC Corp. should benefit from its strategic investments, acquisitions and efforts to expand its market position and strengthen its portfolio. The company is investing in technologies in its agriculture business and launching new products with a goal to enhance value to the farmers.

Healthy Growth Prospect: The Zacks Consensus Estimate for earnings for 2017 is currently pegged at $3.35, reflecting an expected year-over-year growth of 18.9%. Moreover, earnings are expected to register a 11.9% growth in 2018. The stock also has a long-term (3-5 years) expected earnings per share (EPS) growth rate of roughly 10.9%, higher than the industry average of 10.4%.

Lithium Unit Showing Promise: FMC Corp. is seeing strong demand in its Lithium unit. A significant long-term driver for the lithium business is the expected rapid adoption of lithium-ion batteries in electric vehicles. The company, last year, said that it will triple its lithium hydroxide production capacity by adding 20,000 metric tons per year. It will execute this expansion in three phases over the next few years. The move is based on the growing demand for electric vehicles. FMC Corp. has also landed a new long-term supply deal with Quebec, Canada-based Nemaska Lithium, Inc. Under the deal, Nemaska will provide FMC Corp. with 8,000 metric tons of lithium carbonate annually starting in mid-2018. The deal will further diversify FMC Corp.’s supply sources. The company expects its lithium business to deliver strong earnings growth in 2017.

Acquisitions to Boost Growth: The recently announced acquisition of a major portion of DuPont's (NYSE:DD) Crop Protection business has provided a significant growth platform for FMC’s Agricultural Solutions unit. Under the terms of the agreement, FMC Corp. will buy DuPont's Cereal Broadleaf Herbicides and Chewing Insecticides portfolios as well as some of the latter’s Crop Protection research and development pipeline and organization. These assets generated revenues of around $1.4 billion last year.

After deal closure (expected in fourth-quarter 2017), FMC Corp.’s Agricultural Solutions unit will become the fifth biggest crop protection chemical company in the world by sales with estimated annual revenues of around $3.8 billion. The acquisition will significantly increase the company’s presence in Asia and Europe and will be immediately accretive to its adjusted earnings per share.

Moreover, the acquisition of Cheminova has reinforced FMC Corp.'s agriculture business and expanded its access in major agricultural end markets. The company is making a good progress with the integration of the acquired operations of Cheminova and expects to achieve Cheminova-related full run rate cost savings of $140 million to $160 million by mid-2017.

Other Stocks Worth a Look

Other well-placed companies in the chemical space include The Chemours Company (NYSE:CC) and Kronos Worldwide, Inc. (NYSE:KRO) , both holding a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Chemours has an expected long-term growth of 15.5%.

Kronos has an expected long-term growth of 5%.

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