Here's Why You Should Buy Westlake (WLK) Stock Right Now
Westlake (WLK) benefits from strong demand for its products on continued global economic expansion, higher pricing and synergies of acquisitions.
Shares of Westlake Chemical Corporation WLK have gained 15.6% over the past six months, outperforming its industry’s rise of 13% over the same time frame. The company, currently sporting a Zacks Rank #1 (Strong Buy), is benefiting from the global economic rebound, higher sales prices for most of its key products, and demand strength in building and construction materials business.
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.
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Let’s delve deeper into the factors that make this chemical maker an attractive choice for investors right now.
Estimates Going Up
Over the past two months, the Zacks Consensus Estimate for Westlake Chemical for 2021 has increased around 9%. The consensus estimate for fourth-quarter 2021 has also been revised 9.7% upward over the same time frame. The favorable estimate revisions instill investor confidence in the stock.
Solid Growth Prospects
The Zacks Consensus Estimate for earnings for 2021 for Westlake Chemical is currently pegged at $15.59, reflecting an expected year-over-year growth of 580.8%. Earnings are also expected to register a 419.5% growth in fourth-quarter 2021.
Impressive Earnings Surprise History
Westlake Chemical has outpaced the Zacks Consensus Estimate in each of the trailing four quarters. In this time frame, it has delivered an earnings surprise of 17.8%, on average.
Growth Drivers in Place
Westlake Chemical is benefiting from strong demand for most of its products on continued global economic expansion. It is gaining from higher demand in its polyethylene business in specialty applications, especially consumer product packaging, and strength in global demand for polyvinyl chloride (“PVC”) resin. The company is witnessing strong demand in the downstream building products business on the back of continued housing growth and spending on repair and remodeling activities.
Strong demand in North American residential construction and the repair and remodeling markets is also driving prices of PVC resin. Westlake Chemical’s Olefins unit is also benefiting from higher prices of all products on the back of strong global demand.
The company will also gain from its capacity expansion projects and actions to improve operating efficiency and reduce costs. It is also making disciplined investments, developing new products and leveraging its current products and footprint globally.
Westlake Chemical should also benefit from synergies of acquisitions. The company, in its third-quarter call, said that it expects that the recently completed acquisitions of LASCO Fittings, Boral North America and Dimex, totaling around $2.6 billion, will initiate a stage of development and growth for its building products business. It is optimistic that the investments will strengthen its footprint in the sustainable building product markets and provide long-term growth opportunities.
The company, in Nov 2021, formed a definitive agreement with Hexion Inc. to acquire the latter’s global epoxy business. The deal will add a downstream portfolio of coatings and composite products to its chloro-vinyls businesses. This will enable the company to expand its integrated business. The industries served by Hexion Epoxy are lucrative to Westlake and promise to be a synergistic addition to its existing businesses.
Stocks to Consider
Other top-ranked stocks worth considering in the basic materials space include Albemarle Corporation ALB, Commercial Metals Company CMC and Olin Corporation OLN.
Albemarle, currently sporting a Zacks Rank #1, has an expected earnings growth rate of 49.8% for the current year. The Zacks Consensus Estimate for ALB's current-year earnings has been revised 9.2% 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 39% in a year.
Commercial Metals, carrying a Zacks Rank #1, has a projected earnings growth rate of 10.5% for the current fiscal year. 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 60% in a year.
Olin currently carries a Zacks Rank #2 (Buy). OLN has a projected earnings growth rate of 4.2% for the current year.
The Zacks Consensus Estimate for Olin's current-year earnings has been revised 5.9% upward over the past 60 days. OLN shares have popped around 106% in a year.
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Westlake Chemical Corporation (WLK): Free Stock Analysis Report
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Olin Corporation (OLN): Free Stock Analysis Report
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