Why Chemours Co (NYSE:CC) Stock is the Recipe for Gains
With so many investors spending time trying to figure out when their favorite growth stocks are going to bottom out, many are missing a big rally in the materials sector and constructive action in names like Chemours Co (NYSE:CC).
With so many investors spending time trying to figure out when their favorite growth stocks are going to bottom out, many are missing a big rally in the materials sector and constructive action in names like Chemours Co (NYSE:CC). While these types of stocks may not get the headlines and recognition that other areas of the market do, that doesn't mean they don't deserve a place in your portfolio. After all, the goal of trading and investing is to generate wealth, regardless of which stocks are making that happen.
Keep in mind that basic materials companies are playing a huge role in the economic recovery and are businesses that help to fuel growth all over the world. Specifically, chemical stocks are making some very nice moves to the upside in 2021 given the fact that the industry is expected to grow by about 8% in 2021, according to Deloitte. Chemours Co is a standout chemicals company that could be the perfect recipe for gains going forward, and here are a few reasons why.
Leading Global Provider of Performance Chemicals
Are you familiar with performance chemicals? They are essential inputs in end-products and processes in various industries including plastics and coatings, refrigeration and air conditioning, general industrial, electronics, mining, and oil refining. Many of these industries are crucial components of the economy, which is part of the reason why Chemours is such an intriguing prospect. It's a leading global provider of performance chemicals that was formed in a spinoff from DuPont. The company operates in four segments, titanium technologies, thermal & specialized solutions, advanced performance materials, and chemical solutions. Chemours is the world's largest producer of titanium dioxide, which is used for coatings, plastics, and laminates. It's also a market leader in refrigerants and advanced performance materials including Teflon.
The company even creates high-quality industrial chemical products including sodium cyanide that are used for mining. This is a truly diverse business that creates chemicals in high demand worldwide, which is why it's a great option in the materials sector. It's also worth mentioning that the company's thermal and specialized solutions segment could soon be a nice growth driver. That's because the company is a leader in developing sustainable technologies like Opteon, which is a refrigerant that isn't harmful to the ozone. Since the demand growth for Chemours products is typically tied to global GDP growth, investors should be very bullish about this company's prospects as the world bounces back from the impacts of the pandemic. Finally, after President Biden's upcoming infrastructure bill gets passed, Chemours should see even heavier demand for many of its products.
Q1 Earnings Strong and Full Year Outlook Boosted
Another reason to consider adding shares of Chemours at this time is that the company reported a very strong Q1 earnings report. With net sales of $1.4 billion, up 10% year-over-year, and the highest quarterly sales total in over 2 years for the company, it's clear that Chemours is off to a great start in 2021. The Titanium Technologies segment was the main driver for the sales figure, as volumes were up 16% year-over-year even with logistics issues related to Winter Storm Uri. The company also reported an adjusted EBITDA of $268 million and an adjusted EPS of $0.71, beating the consensus estimate.
Investors should be confident that Chemours is heading in the right direction thanks to the fact that the company boosted its 2021 outlook. Chemours now estimates that 2021 Adjusted EBITDA will come in between $1.10 and $1.25 billion, up about $100 million vs. the prior outlook. The earnings report has the stock breaking out to new 52-week highs and could be just the catalyst it needs to get going. Note that this stock is still well off of its all-time high of $58.08 from back in 2017, which means that there's plenty of upside at current prices.
If you're looking for exposure to the materials sector and want to own an industry-leading company, Chemours stock is a fantastic option. It provides a great way to take advantage of the economic recovery and even compensates investors with some added income thanks to the 2.96% dividend yield. Chemours has a great chance to continue its positive momentum in Q2 and is fairly cheap compared to many other cyclical stocks right now, so consider adding shares on the next pullback.
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