Here's Why You Should Invest In Chemours (CC) Stock Now
Chemours (CC) gains on strong end-market demand and its cost-reduction and pricing actions.
Shares of The Chemours Company CC have gained around 12% over the past three months. It is benefiting from higher demand for Opteon, 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 #1 (Strong Buy) and a VGM Score of B. Our research shows that stocks with a VGM Score of A or B, combined with a Zacks Rank #1 or 2 (Buy), offer the best investment opportunities for investors.
Let's see what makes this chemical maker a compelling investment option at the moment.
Shares of Chemours have gained 28.9% over a year compared with the 12.2% rise of its industry. It has also outperformed the S&P 500’s 26.9% rise over the same period.
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Estimates Moving Up
Over the past two months, the Zacks Consensus Estimate for Chemours for the current year has increased around 9.2%. 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 34.2%, on average.
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 7.46, cheaper compared with the industry average of 9.15.
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 72%, above the industry’s level of 22.5%.
Growth Drivers in Place
Chemours is benefiting from a rebound in demand from the coronavirus-induced downturn, strong execution and its cost-reduction and pricing actions. The company is seeing demand revival across its end markets and regions on the global macroeconomic recovery. Strong market demand is contributing to higher volumes and improved pricing.
The company’s Thermal & Specialized Solutions segment is benefiting from strong demand in refrigerants across most regions. It is also witnessing strong adoption of the Opteon platform in all markets amid headwinds from semiconductor supply-chain disruptions that are affecting automotive demand. Chemours remains committed toward driving Opteon adoption.
Chemours should also 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 its margins. It is also taking appropriate pricing measures to counter higher costs partly due to supply chain issues and raw material inflation.
The company also remains focused on boosting its cash flows and returning value to shareholders. It generated strong free cash flow of $244 million in the third quarter. Chemours expects to generate free cash flow of more than $500 million for full-year 2021 and return the majority of this to its shareholders through dividend and share repurchases.
Other Stocks to Consider
Some other top-ranked stocks worth considering in the basic materials space include Albemarle Corporation ALB, Commercial Metals Company CMC and United States Steel Corporation X.
Albemarle currently sports a Zacks Rank #1. The Zacks Consensus Estimate for ALB's current-year earnings has been revised 11.2% upward over the past 60 days. You can see the complete list of today’s Zacks #1 Rank stocks here.
Albemarle beat the Zacks Consensus Estimate for earnings in each of the trailing four quarters, the average being 22.1%. ALB has rallied around 45% in a year.
Commercial Metals carries a Zacks Rank #1. CMC's consensus estimate for the current fiscal year has been revised 6.6% upward over the past 60 days.
Commercial Metals beat the Zacks Consensus Estimate for earnings in three of the last four quarters while missed once. It has a trailing four-quarter earnings surprise of roughly 7.4%, on average. CMC has rallied around 72% in a year.
United States Steel currently carries a Zacks Rank #2. The Zacks Consensus Estimate for X's current-year earnings has been revised 5.9% upward over the past 60 days.
United States Steel beat the Zacks Consensus Estimate for earnings in each of the trailing four quarters, the average being 24.5%. X shares have popped around 32% in a year.
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United States Steel Corporation (X): Free Stock Analysis Report
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The Chemours Company (CC): Free Stock Analysis Report
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