According to a report by industry trade group, The American Chemistry
Council (ACC), U.S Chemicals production is expected to grow by approximately
25% over the next five years, with industry shipments increasing to $1
trillion on the back of increased natural gas production from shale and
revival of demand for plastic resins and organic chemicals helped by export
markets. Significant spending in general heavy industrial manufacturing
during 2014 will also attract foreign-based chemical production facilities
back to the U.S., driven by the availability of cheap natural gas. Production
of specialty chemicals will be driven by strong demand from end-use markets,
most notably light vehicles and housing. According to ACC projections,
U.S. chemicals production will increase 2.5% in 2014 and 3.5% in 2015 after
rising 1.6% during 2013.
According to the Chemistry Industry Association of Canada (CIAC), capital
investment in Canadian chemical projects is anticipated to increase 28%
in 2014 to $2.6 billion following a 20% increase in 2013, on the back of
availability of relatively low-cost natural gas and natural gas liquids
in North America, attractive corporate tax rates in Canada and strong demand
for certain inorganic chemicals. Sales of industrial chemicals increased
6% during 2013 exceeding $27 billion, while exports increased 8%. However,
CIAC anticipates that declining chemical commodity prices could drive down
sales by 8% during 2014.
Ubika Research has picked nine chemical stocks which offer an attractive
investment opportunity for 2014. These stocks are estimated to report strong
sales and earnings growth during 2014, according to the consensus estimates
compiled by Bloomberg. Moreover, these stocks are trading at relatively
low forward PE in comparison to the industry average and are expected to
provide high return on equity in 2014. Additionally, these stocks are estimated
to provide attractive dividend yields in 2014. During the past three
months, these stocks have registered significant gains with daily average
trading volume in excess of 100,000.
|
Company Name |
Exchange |
Ticker |
Market Cap |
Last Price |
Average Volume (3-Month) |
Price Change (3-Month) |
Sales Growth |
EPS Growth |
1-Yr Forward PE ratio |
Return On Equity |
Dividend Yield |
|
CVR Partners LP |
NYSE |
UAN |
1.3 |
17.71 |
359,764 |
-5.5% |
3.2% |
3.0% |
11.2 |
27.5% |
11.1% |
|
A Schulman Inc |
NASDAQ |
SHLM |
1.0 |
35.22 |
125,612 |
15.3% |
11.2% |
28.2% |
16.3 |
13.3% |
2.3% |
|
RPM International Inc |
NYSE |
RPM |
5.7 |
43.17 |
684,069 |
15.8% |
6.6% |
16.0% |
20.4 |
20.3% |
2.2% |
|
Sensient Technologies Corp |
NYSE |
SXT |
2.6 |
51.01 |
293,445 |
2.5% |
1.4% |
8.6% |
18.9 |
11.2% |
1.8% |
|
Cabot Corp |
NYSE |
CBT |
3.3 |
51.98 |
217,286 |
16.3% |
7.2% |
24.0% |
14.2 |
11.6% |
1.6% |
|
Methanex Corp |
TSX |
MX |
6.4 |
66.60 |
573,960 |
18.1% |
13.5% |
164.8% |
13.0 |
28.4% |
1.3% |
|
HB Fuller Co |
NYSE |
FUL |
2.6 |
50.82 |
280,149 |
7.3% |
4.4% |
16.3% |
16.4 |
16.8% |
0.8% |
|
Cytec Industries Inc |
NYSE |
CYT |
3.3 |
93.42 |
314,650 |
8.1% |
11.6% |
57.7% |
19.6 |
13.4% |
0.6% |
|
Aceto Corp |
NASDAQ |
ACET |
0.7 |
23.57 |
297,379 |
40.4% |
10.5% |
37.1% |
19.3 |
13.5% |
NA |
Source: Bloomberg
Company Description:
CVR Partners LP (NYSE: UAN)
CVR Partners, LP was formed to own, operate and grow its nitrogen fertilizer
business. The company’s nitrogen fertilizer manufacturing facility utilizes
a petroleum coke, or pet coke, gasification process to produce nitrogen
fertilizer. CVR Partners facility includes an ammonia unit, an urea ammonium
nitrate, or UAN, unit, and a gasifier complex.
A Schulman Inc (NASDAQ: SHLM)
A. Schulman, Inc. supplies plastic compounds and resins which are used
as raw materials by its customers. The company combines basic resins purchased
from basic resin producers and enhances them with additives. Schulman
generally produces compounds to meet customer requirements and on the basis
of customer commitments, but also buys and then resells prime and off-grade
plastic resins.
RPM International Inc (NYSE: RPM)
RPM International, Inc. manufactures, markets, and sells various specialty
chemical product lines. The company’s product lines include specialty paints,
protective coatings and roofing systems, sealants and adhesives, focusing
on the maintenance needs of both the industrial and consumer markets.
Sensient Technologies Corp (NYSE: SXT)
Sensient Technologies Corporation supplies colors, flavors, and fragrances.
The company manufactures a variety of ink-jet inks, cosmetic and pharmaceutical
additives, and food and beverage flavors.
Cabot Corp (NYSE: CBT)
Cabot Corporation has businesses in chemicals, performance materials,
and specialty fluids. The company manufactures and sells carbon black,
fumed silica, plastics, inkjet colorants, tantalum, niobium, and germanium.
Cabot’s specialty fluids business produces and markets cesium formate as
a drilling and completion fluid for use in oil and gas well operations.
Methanex Corp (TSX: MX)
Methanex Corporation produces and markets methanol. The company’s methanol
is used to make industrial and consumer products including windshield washer
fluid, plywood floors, paint, silicone sealants and synthetic fibres.
HB Fuller Co (NYSE: FUL)
H.B. Fuller Company manufactures and markets adhesives, sealants, coatings,
paints, and other specialty chemical products worldwide. The company’s
products are sold in countries that include North America, Europe, Latin
America, the Asia Pacific region, India, the Middle East and Africa.
Cytec Industries Inc (NYSE: CYT)
Cytec Industries Inc. develops manufactures, and markets specialty chemicals,
specialty materials, and building block chemicals. The company serves various
end users including aerospace, plastics, coatings, mining, paper, water
treatment, and automotive industries.
Aceto Corp (NASDAQ: ACET)
Aceto Corporation operates as an international marketing, sales and distribution
company. The company distributes industrial chemicals used in the agriculture,
color producing, pharmaceutical, and surface coating industries.
