Chemours (CC) Stock Up 28% YTD: What's Driving the Rally?
Chemours (CC) benefits from demand revival across all markets and regions and its productivity and operational improvement actions.
The Chemours Company’s CC shares have shot up 27.5% so far this year. The chemical maker has also outperformed its industry’s rise of 7.1% over the same time frame. Moreover, it has topped the S&P 500’s 19.6% rise over the same period.
Let’s dive into the factors behind this Zacks Rank #2 (Buy) stock’s price appreciation.
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What’s Favoring CC?
Chemours is benefiting from a rebound in demand from the coronavirus-induced slowdown, strong execution and its cost-reduction measures. Forecast-topping earnings performance in the first two quarters of 2021 and upbeat prospects have also contributed to the rally in the company’s shares.
The company, in its second-quarter call, said that it expects adjusted EBITDA and adjusted earnings for 2021 toward the higher end of its previously disclosed guidance ranges, owing to the strong second-quarter results and the ongoing business momentum.
Earnings estimates for Chemours have also been going up over the past two months. The Zacks Consensus Estimate for 2021 has increased 14.2%. The consensus estimate for third-quarter 2021 has also been revised 10.2% upward over the same time frame.
Chemours is seeing demand revival across all markets and regions on the global macroeconomic recovery. It is gaining from increasing adoption of the Opteon platform. It remains is committed toward driving Opteon adoption. The company is seeing higher demand for Opteon in mobile and stationary applications. It is ramping up production at the new low-cost Opteon Corpus Christi facility.
The company’s Advanced Performance Materials unit is also benefiting from demand strength in electronics, communications, industrial and transportation markets. Strong demand in all regions and end markets is also driving volumes in its Titanium Technologies unit.
Chemours 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’s cost-reduction program along with its productivity and operational improvement actions across its businesses are expected to support margins in 2021.
The company also remains focused on boosting its cash flows and returning value to shareholders. It generated strong free cash flow of $189 million in the second quarter. Chemours expects to generate free cash flow of more than $450 million in 2021 and return the majority of this to its shareholders through dividend and share repurchases.
The Chemours Company Price and Consensus
Stocks to Consider
Other top-ranked stocks worth considering in the basic materials space include BASF SE BASFY, AdvanSix Inc. ASIX and Avient Corporation AVNT, each sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
BASF has an expected earnings growth rate of 96.7% for the current year. The company’s shares have gained around 18% in the past year.
AdvanSix has a projected earnings growth rate of 160.4% for the current year. The company’s shares have shot up around 206% in a year.
Avient has an expected earnings growth rate of 75.1% for the current year. The stock has also surged around 79% over a year.
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