In this article, we'll take a look at the top 10 U.S. chemical stocks to invest in right now. If you would like to skip the US chemical industry overview and latest news, please skip to the next page. The 5 Best U.S. Chemical Stocks to Invest Now.
The chemical industry is one of the most technologically complex, important, and capital-intensive sectors in the world and in the United States. Chemicals run the world and often form the backbone of critical industrial processes such as semiconductor manufacturing and aerospace exploration. Chip manufacturing requires wafers to be cleaned multiple times during the manufacturing process. This is because the transistors (simple electrical circuits) in modern semiconductors are thousands of times smaller than the width of a human hair. Therefore, even the smallest impurity introduced through the manufacturing process itself or the environment in which the chip is manufactured can render a product worth thousands of dollars worthless.
As a result, analysts believe that more than 1,000 chemicals and metals are used in chip production, and semiconductor manufacturing companies such as Intel Corporation (NASDAQ:INTC) and Taiwan Semiconductor Manufacturing Company (NYSE:TSM) We believe that we can reliably supply chemicals. A chain ready to meet your needs instantly. For the U.S. chemical industry, this means there may be more promise for the future. This is because the US government, recognizing that much of the world's advanced semiconductor supply chain is located in Asia, has earmarked billions of dollars for companies wanting to set up facilities in the US. Both Intel and TSMC are working with Governor Biden-Harris on this basis, with a major announcement coming in April 2024, with the latter agreeing to make a multi-billion dollar deal with the government to establish a new facility in Arizona. A funding agreement has been reached.
While semiconductors are all about the hype, especially with Wall Street's growing interest in the potential for applying advanced data science techniques called artificial intelligence to industrial, business, and consumer applications, the U.S. chemical industry has made significant progress in its own right. . This came in the form of a new rule from the Environmental Protection Agency (EPA). In April, the EPA's new rule targeted ethylene oxide and chloroprene emissions in the United States, with the goal of reducing pollution by more than 6,200 tons per year to reduce cancer and other health risks for Americans. EPA believes that industrial processes covered by these rules could reduce emissions by as much as 80%, but as is almost always the case with such laws, there has been strong opposition from the U.S. chemical industry. was hit by.
After the rule change was announced, the American Chemistry Council, a lobbying group of about 200 companies, expressed concern that the EPA was using flawed benchmark values to determine the toxicity of ethylene oxide. . This chemical, called EtO, is one of the few substances suitable for sterilization applications and is therefore used in several industrial processes, including the critical medical device industry.
News such as strict new rules is not a tailwind for stocks no matter how you look at it. But US chemical stocks were unfazed by his EPA announcement. This is likely because the EPA targeted only a few chemicals rather than a broad range of industries. Indeed, U.S. chemical stock investors should be happy with their investments this year. Like other industrial stocks, U.S. chemical stocks are sensitive to economic conditions. The more money moves through the economy and the easier access to capital, the better chemical stocks will perform. Looking at this, the performance of the Dow Jones US Chemical Index over the past 12 months is not surprising.
The index is up 8.5% over the past 12 months, and year-to-date, the U.S. chemical stock index is up 5% on higher prices. Chemical stocks are less likely to be pioneers than US chip design star Nvidia Corporation (NASDAQ:NVDA), so we like them for their relative stability and low volatility.
Before diving into our list of the best US chemical stocks, it's also important to see what hedge funds are saying about this sector. In this regard, White Brook Capital Partners said of Green Plains, Inc. (NASDAQ:GPRE) in its Q4 2023 investor letter:
Green Plains is a troubled investment. The company's stock did not perform as expected in 2023, and 2024 also got off to a tough start. The company remains well-positioned as corn crushing margins remain significantly positive, generating solid margins per corn kernel. Additionally, the industry's progress is clear. Ethanol producers have the opportunity to increase short- and long-term profitability by extracting larger amounts of corn oil, specialty alcohols, and dense feed proteins from each kernel of corn. It is also becoming increasingly clear that the required capital will prevent many incumbent operators from making the transition. Green Plains was fortunate to begin the transformation relatively early and have the scale necessary to complete the transformation.
That year, the federal government banned some Midwestern states from blending higher percentages of ethanol into gasoline and included those states' substrates in climate change subsidies under the Inflation Control Act. The environment has tilted in favor of ethanol producers.
Finally, the company is at the forefront of sustainable aviation fuel (SAF) development for the ethanol industry, which, if supplied by current ethanol plants, would use a significant portion of the current ethanol production in the United States. This is an example of future use. This year's developments have been positive for Green Plains, with earnings increasing dramatically in less than a year, higher in two years, and even higher in three years, and the stock price incredibly cheap, especially We are looking ahead to the next two or three years.
The problem is that Green Plains' management has consistently over-promised and under-delivered, repeatedly delaying approval timelines for high-protein feed monetization and carbon sequestration. Today's stock prices indicate that the public has little confidence in management's ability to execute on its communicated vision. Activist investors are already on board, and while the company's strategic position is strong, I think some investors will be willing to invest in the stock in the short term given the weak share price. is expected. White Brook believes the company's intrinsic value is many times higher than today's price.
So, with these details in mind, let's take a look at the best US chemical stocks that hedge funds are buying. Stocks to watch include Ecolab Inc. (NYSE:ECL), The Sherwin-Williams Company (NYSE:SHW), and Axalta Coating Systems Ltd. (NYSE:AXTA).
Chemist in a laboratory mixing special chemicals and materials for research.
our methodology
Our list of the best U.S. chemical stocks ranks all U.S.-based chemical companies by the number of hedge funds that bought their shares in Q4 2023 and selects the top chemical stocks.
For these best US chemical stocks, we used hedge fund sentiment. The top 10 consensus stocks selected by hedge funds have outperformed the S&P 500 index by more than 140 percentage points over the past 10 years (Please see here for the detail). That's why we pay close attention to this often ignored metric.
Top 10 US chemical stocks to invest in now
10. Eastman Chemical Company (NYSE:EMN)
Number of hedge fund investors in Q4 2023: 31
Eastman Chemical Company (NYSE:EMN) is a leading chemical company headquartered in Kingsport, Tennessee. The company has been performing well financially recently, beating analyst EPS estimates in each of the last four quarters.
At the end of Q4 2023, 31 of the 933 hedge funds in Insider Monkey's database purchased and owned shares of Eastman Chemical Company (NYSE:EMN). Israel Englanders Millennium Management was the company's largest investor with a $184 million stake.
Eastman Chemical Company ( NYSE:EMN). Stocks that hedge funds are buying.
9. Olin Corporation (NYSE:OLN)
Number of hedge fund investors in Q4 2023: 36
Olin Corporation (NYSE:OLN) is a diversified chemical company with a global footprint. We sell products such as vinyl, epoxy, and alkali. 2024 is shaping up to be a big year for the company, as it, along with other U.S. companies, has filed lawsuits against India, China and other countries for countervailing and dumping practices.
By the end of last year's December quarter, 36 of the 933 hedge funds surveyed by Insider Monkey had invested in the company. Olin Corporation (NYSE:OLN)'s largest hedge fund shareholder is Donald Yachtman's Yachtman Asset Management, with a stake worth $229 million.
8. DuPont de Nemours (NYSE:DD)
Number of hedge fund investors in Q4 2023: 39
DuPont de Nemours, Inc. (NYSE:DD) is a well-known and iconic American chemical company headquartered in Wilmington, Delaware. Its gravitas and experience put it at the forefront of the industry, which DuPont de Nemours (NYSE:DD) will leverage in April 2024 when it introduces a new laminate material for aerospace applications. Did.
In the fourth quarter of 2023, 39 of the 933 hedge funds tracked by Insider Monkey held shares in the company. The largest stakeholder in DuPont de Nemours Inc. (NYSE:DD) in our database is Dan Loeb's Third Point, with US$266m worth of shares.
7. PPG Industries, Inc. (NYSE:PPG)
Number of hedge fund investors in Q4 2023: 39
PPG Industries, Inc. (NYSE:PPG) manufactures and sells paints, coatings, and other products for use in armor, food, and other items. The stock has an average rating of “Buy” and an average analyst price target of $159.24.
Insider Monkey researched 933 hedge funds' portfolios for stock holdings in the December 2023 quarter and found 39 PPG Industries, Inc. (NYSE:PPG) shareholders. Israel Englanders Millennium Management held the largest stake worth $293 million.
6. Avantar Co., Ltd. (NYSE:AVTR)
Number of hedge fund investors in Q4 2023: 41
Avantor, Inc. (NYSE:AVTR) is a leading chemical company headquartered in Radnor, Pennsylvania. Primarily caters to the needs of the medical industry. Analysts are forecasting earnings of 20 cents ahead of the company's first-quarter earnings report, scheduled for later this month.
The company was an investor in 41 of the 933 hedge funds in Insider Monkey's Q4 2023 database. The largest stakeholder in Avantor, Inc. (NYSE:AVTR)'s database is Israel Englander's Millennium Management with an investment of $232 million.
Ecolab, Inc. (NYSE:ECL), Avantar, Inc. (NYSE:AVTR), Sherwin-Williams Company (NYSE:SHW), and Axalta Coating Systems, Inc. (NYSE:AXTA) are among the top U.S. chemical stocks ranked by hedge funds. It's a brand. .
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Disclosure. none. Top 10 US chemical stocks to invest in now Originally published on Insider Monkey.
