11 Best Chemical Stocks To Invest In Now

·8 min read

In this article, we discuss the 11 best chemical stocks to invest in now. If you want to skip our detailed analysis of these stocks, go directly to the 5 Best Chemical Stocks To Invest In Now.

Chemical companies across the world are scrambling to deliver on sustainability and decarbonization goals even as the demand for commodity and specialty chemicals increases and leads to robust growth in prices. However, these firms still deliver incredible value to investors. According to a report by consulting firm Deloitte, chemical volumes in the United States are set to grow at a rate of 3% in 2022, doubling from the 1.5% rate in 2021. Shipments are also predicted to increase.

Trends Shaping Global Chemical Industry

Shifting demand with respect to plastics and specialty materials, sustainability initiatives, digital transformation, and changing consumer behaviors are some of the broad trends expected to shape the future of the chemical industry. Trade organization American Chemistry Council had forecast that capital spending in the chemicals sector will top $30 billion in 2021 and continue to rise at a slower rate of around 3% in 2022. Even as production increases, supply chain issues, labor shortages, and price volatility will continue to haunt the market in 2022.

The chemicals industry is also evolving with the development of new technologies. For example, the demand for Internet of Things (IoT) devices has created an impetus for innovation. The rise of blockchain has enabled supply chain transparency and product traceability. According to a report by BASF, China and emerging economies are leading this largely positive outlook on chemicals, driven by a focus on agrochemicals and specialty chemicals.

Many chemical companies have stable businesses and provide investors with consistent dividends. In an inflationary marketplace, these traits are akin to gold. Since many analysts expect interest rates to rise and inflation problems to persist throughout 2022, the chemical sector is the ultimate value play for a safer portfolio. Some of the top chemical stocks to buy now include DuPont de Nemours Inc (NYSE:DD), Dow Inc. (NYSE:DOW), and LyondellBasell Industries N.V. (NYSE:LYB), among others discussed in detail below.

Our Methodology

The companies that operate in the chemical sector were selected for the list through a careful assessment of business fundamentals and analyst ratings to provide readers with some context for their investment choices.

For this list we also analyzed our data of close to 900 hedge funds and picked the chemical stocks that were popular among these elite money managers as of the end of September of 2021.

11 Best Chemical Stocks To Invest In Now
11 Best Chemical Stocks To Invest In Now

Marcin Balcerzak/Shutterstock.com

Best Chemical Stocks To Invest In Now

11. H.B. Fuller Company (NYSE:FUL)

Number of Hedge Fund Holders: 9

H.B. Fuller Company (NYSE:FUL) is a specialty chemicals firm. New York-based investment firm P2 Capital Partners is a leading shareholder in H.B. Fuller Company (NYSE:FUL) with 1.1 million shares worth more than $73 million.

H.B. Fuller Company (NYSE:FUL) has paid a dividend to shareholders for fifty consecutive years, an impressive record considering all the ups and downs at the market during the time. Despite pressures on margins, H.B. Fuller Company (NYSE:FUL) managed to post strong results for the third quarter and raised fiscal year guidance, saying it expected up to 18% revenue growth in 2021 and up to 17% revenue growth year-on-year in the fourth quarter.

Just like DuPont de Nemours Inc (NYSE:DD), Dow Inc. (NYSE:DOW), and LyondellBasell Industries N.V. (NYSE:LYB), H.B. Fuller Company (NYSE:FUL) is one of the stocks attracting the attention of value investors.

10. Aemetis, Inc. (NASDAQ:AMTX)

Number of Hedge Fund Holders: 12

Aemetis, Inc. (NASDAQ:AMTX) is an energy and biochemicals firm. In late December, Aemetis (NASDAQ:AMTX) announced that it had signed a deal to purchase a 125 acre former US Army facility in California. The facility has production buildings, railroad, and power substations. Aemetis (NASDAQ:AMTX) plans to use it to market low carbon renewable fuels to aviation and truck companies. The demand for these fuels has been rising as businesses aim to reduce their carbon footprints for tax benefits.

Aemetis (NASDAQ:AMTX) had revealed in early December that it had signed a seven-year deal with American Airlines to supply the latter with 280 million gallons of blended fuel containing sustainable aviation fuel. The agreement is worth more than $1 billion.

9. Huntsman Corporation (NYSE:HUN)

Number of Hedge Fund Holders: 26

Goldman Sachs analyst Robert Koort recently upgraded Huntsman Corporation (NYSE:HUN) stock to Buy from Neutral and raised the price target to $43 from $40. In an investor note, the analyst highlighted that Huntsman Corporation (NYSE:HUN) seemed undervalued given the clear visibility of the firm on capital deployment and a “firm” commitment to return excess free cash flow to shareholders. The analyst added that the “cost realignment and synergy extraction” of Huntsman Corporation (NYSE:HUN) was expected to drive margins improvement as well.

Hedge funds concur with this analysis. At the end of the third quarter of 2021, 26 hedge funds in the database of Insider Monkey held stakes worth $984 million in Huntsman Corporation (NYSE:HUN).

In its Q4 2020 investor letter, Madison Funds, an asset management firm, highlighted a few stocks and Huntsman Corporation (NYSE:HUN) was one of them. Here is what the fund said:

“We have increased our exposure modestly to several industrial and materials names that we believe should benefit from the reopening of the economy in 2021. One such name is Huntsman Corporation (HUN); a company we have followed for more than 15 years and have never owned before. Huntsman Corporation is a global producer of organic chemicals. The company was founded by well-known businessperson and political figure, Jon Huntsman, in 1970 and has grown through its history into a diversified portfolio of chemical businesses Our interest in Huntsman coincides with the current trough conditions in the global economy due to the Covid-19 recession. The company’s end markets are cyclical and demand for their products is highly price elastic. Additionally, the advanced materials business suffered due to the exposure to the aerospace original equipment manufacturer (OEM) down cycle. Despite these challenges, we believe management has executed well; no surprise, given their track record. We think Earnings before interest, taxes, and amortization (EBITDA) troughed in second quarter and are heartened by the lack of further deterioration in 3Q and 4Q. Looking to the future, we see an intriguing reflation opportunity driven by the resumption of economy activity in late 2021. Further, we posit that the easy monetary policy, that has characterized this cycle, has inflationary side effects which would benefit a basic materials producer such as Huntsman Corporation (NYSE:HUN). The company has also been moving downstream to more value-added businesses, which may drive EBITDA multiple expansion in the future.”

8. Green Plains Inc. (NASDAQ:GPRE)

Number of Hedge Fund Holders: 29

Green Plains Inc. (NASDAQ:GPRE) makes and sells ethanol and related products. The company has diversified business and revenue streams in recent years, making moves into the AgTech and food delivery markets, evidenced by the heavy investment in Fluid Quip Technologies. Green Plains Inc. (NASDAQ:GPRE) has built a solid business around ethanol under government mandates for fuel balancing. However, even as that market grows, Green Plains Inc. (NASDAQ:GPRE) is already evolving into a tech-based agriculture play.

Oppenheimer analyst Kristen Owen recently initiated coverage of Green Plains Inc. (NASDAQ:GPRE) stock with an Outperform rating and a price target of $46, noting that Green Plains Inc. (NASDAQ:GPRE) had reached an “inflection point” and was positioned for "very high secular growth”.

7. Eastman Chemical Company (NYSE:EMN)

Number of Hedge Fund Holders: 30

Eastman Chemical Company (NYSE:EMN) is one of the most stable chemical businesses in the world. It has consecutively raised dividend payouts for 12 years and has a history of consecutive payments dating back close to three decades. On December 2, Eastman Chemical Company (NYSE:EMN) raised the quarterly dividend by 10% to $0.76 per share. The forward yield was 2.89%. Investors who want dependable options in a volatile market should certainly consider Eastman Chemical Company (NYSE:EMN).

New York-based firm Millennium Management recognizes the potential and is a leading shareholder in Eastman Chemical Company (NYSE:EMN) with 716,774 shares worth more than $72 million.

6. Air Products and Chemicals, Inc. (NYSE:APD)

Number of Hedge Fund Holders: 32

Air Products and Chemicals, Inc. (NYSE:APD) stock has gained importance among investors as the company is one of the few legacy businesses with exposure to the hydrogen market. As governments around the world enact climate-friendly policies and investors place ESG at the center of their decision-making, Air Products and Chemicals, Inc. (NYSE:APD) stock will benefit since hydrogen is seen by many climate experts as a vital pathway to net zero emissions.

Long-term growth investors have much to gain by investing in Air Products and Chemicals, Inc. (NYSE:APD) since the company also has a traditional industrial gases business that is thriving. 32 hedge funds in the database of Insider Monkey were long Air Products and Chemicals, Inc. (NYSE:APD) at the end of September with stakes worth $528 million.

Alongside DuPont de Nemours Inc (NYSE:DD), Dow Inc. (NYSE:DOW), and LyondellBasell Industries N.V. (NYSE:LYB), Air Products and Chemicals, Inc. (NYSE:APD) is one of the stocks that elite investors are buying.

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Disclosure. None. 11 Best Chemical Stocks To Invest In Now is originally published on Insider Monkey.

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