The Chemours Company (NYSE:CC)’s CC shares have shot up roughly 26% over the past six months. It is benefiting from higher demand for Opteon in mobile applications, strong execution and cost-cutting 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 A. 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.
Price Performance
Shares of Chemours have rallied 35.3% year to date against the 8.2% rise of its industry. It has also outperformed the S&P 500’s 10.9% rise over the same period.
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Estimates Northbound
Over the past two months, the Zacks Consensus Estimate for Chemours for the current year has increased around 16.9%. The consensus estimate for 2022 has also been revised 10% 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 55.2%, 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 10.45, cheaper compared with the industry average of 11.53.
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 43.3%, above the industry’s level of 11.3%.
Growth Drivers in Place
Chemours is benefiting from increasing adoption of the Opteon platform and growing applications of fluoropolymers, especially in automotive, electronics and energy end-markets. The company remains is committed toward driving Opteon adoption. The company is seeing higher demand for Opteon in mobile applications. It is ramping up production at the new low-cost Opteon Corpus Christi facility.
The company also stands to gain from its efforts to reduce costs. It is undertaking actions to cut costs by reducing overhead, discretionary spend and capital expenditures. The company, in 2020, benefited from its $160-million cost-management program aimed toward enhancing financial flexibility.
The company’s cost-reduction program along with its productivity and operational improvement actions across its businesses are also expected to support margins in 2021.
Stocks to Consider
Other top-ranked stocks worth considering in the basic materials space include Nucor Corporation (NYSE:NUE) NUE, Cabot (NYSE:CBT) Corporation CBT and Impala Platinum (OTC:IMPUY) Holdings Limited IMPUY.
Nucor has a projected earnings growth rate of 344.9% for the current year. The company’s shares have surged around 127% in a year. It currently sports a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.
Cabot has an expected earnings growth rate of around 126% for the current fiscal. The company’s shares have rallied 56% in the past year. It currently carries a Zacks Rank #2.
Impala Platinum has an expected earnings growth rate of 225.2% for the current fiscal. The company’s shares have surged around 129% in the past year. It currently carries a Zacks Rank #2.
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Nucor Corporation (NUE): Free Stock Analysis Report
Cabot Corporation (CBT): Free Stock Analysis Report
Impala Platinum Holdings Ltd. (IMPUY): Free Stock Analysis Report
The Chemours Company (CC): Free Stock Analysis Report
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