3 Top Chemicals Stocks for September

The chemical industry faced severe difficulties last year due to COVID-19 pandemic-led restrictions. The resurgence of COVID-19 cases and supply chain disruptions continue to impact the industry. However, with increasing vaccinations, the industry is gradually recovering.

With numerous applications of chemical solutions, from helping to preserve and flavor foods, to making soaps and their increasing use in the automobile and construction industry, the industry is expected to grow. According to a Research and Markets report, the global chemicals market is expected to reach $4.30 trillion by 2025.

So, it could be wise to scoop up shares of fundamentally strong chemical companies Dow Inc. (DOW), ICL Group Ltd (ICL), and NewMarket Corporation (NEU). They are expected to keep rallying in upcoming months.

Dow Inc. (DOW)

DOW offers various materials science solutions for consumer care, infrastructure, and packaging markets globally. The company’s segments include Packaging & Specialty Plastics; Industrial Intermediates & Infrastructure; and Performance Materials and Coatings.

On September 16, Capital Power Corporation (CPXWF) announced a 15-year renewable power purchase agreement with DOW’s subsidiary Dow Chemical Canada ULC for 25 megawatts of capacity and the associated environmental attributes Whitla Wind 2 project. This is expected to help increase the company’s revenue.

For the fiscal second quarter that ended June 30, 2021, DOW’s net revenue increased 66.2% year-over-year to $13.88 billion. In addition, the company’s total operating EBITDA increased 372% year-over-year to $3.57 billion. Its net income came in at $1.90 billion compared to a loss of $225 million in the year-ago period. Also, its EPS came in at $2.51 compared to a loss per share of $0.31 in the prior year's quarter.

DOW’s revenue is expected to come in at $52.87 billion in fiscal 2021, representing a 37.2% year-over-year rise. The company’s EPS is expected to increase 413.3% year-over-year to $8.52 in the current year. In addition, it surpassed Street EPS estimates in each of the trailing four quarters. Over the past year, the stock has gained 22.4% to close Friday’s trading session at $56.81.

It’s no surprise that DOW has an overall grade of A, which equates to a Strong Buy rating in our POWR Ratings system. The POWR Ratings assess stocks by 118 different factors, each with its own weighting. In addition, it has an A grade for Value, and a B for Growth and Sentiment.

DOW is ranked #6 out of 93 stocks in the Chemicals industry. Click here to see the additional POWR Ratings for DOW (Quality, Momentum, and Stability).

ICL Group Ltd (ICL)

Headquartered in Tel Aviv, Israel, ICL functions as a specialty minerals and chemicals company. It operates in four segments: Industrial Products, Potash, Phosphate Solutions, and Innovative Ag Solutions (IAS).

ICL announced on August 30 that it is now able to offer a complete range of mono ammonium phosphate (MAP) solutions from its YPH joint venture plant in China and meet the growing demand from the Electric Vehicle (EV) battery market. As a result, this is expected to lead to increased sales for this solution.

ICL’s total revenue increased 34.4% year-over-year to $1.62 billion for the fiscal second quarter that ended June 30, 2021. The company’s gross profit came in at $570 million, up 78.1% year-over-year. Its net income came in at $140 million, compared to a loss of $168 million in the prior-year quarter. Also, its EPS came in at $0.11, compared to a loss of $0.13 in the year-ago period.

Analysts expect ICL’s revenue to be $6.67 billion in fiscal 2022, representing a 3.9% year-over-year rise. In addition, the company’s EPS is expected to increase 8.5% year-over-year to $0.51 in the next year. Also, it surpassed Street EPS estimates in three of the trailing four quarters. Over the past year, the stock has gained 107.4% to close Friday’s trading session at $7.28.

ICL’s strong fundamentals are reflected in its POWR Ratings. The stock has an overall grade of A, which indicates a Strong Buy rating in our proprietary ratings system.

In addition, ICL has a B grade for Value, Stability, Growth, Quality, and Sentiment. Within the same industry, it is ranked #3. Also, click here to see ICL’s grade for Momentum.

NewMarket Corporation (NEU)

NEU primarily engages in the petroleum additives businesses, offering lubricant additives for various vehicle and industrial applications. It also manufactures chemical components that form additive packages for use in specified end-user applications.

On July 28, NEU’s CEO, Thomas E. Gottwald, said, “We believe the fundamentals of how we run our business – a long-term view, safety, and people-first culture, customer-focused solutions, technology-driven product offerings, and a world-class supply chain capability – will continue to be beneficial for all our stakeholders.”

NEU’s total revenues increased 43.8% year-over-year to $590.72 million for the second quarter that ended June 30, 2021. Its non-GAAP net income came in at $51.95 million, up 132.5% year-over-year. Its EBITDA increased 75.6% year-over-year to $96.52 million, while its EPS came in at $4.75, up 131.7% year-over-year.

Analysts expect NEU’s EPS to grow at 7.7% in the next five years. Over the past three months, the stock has gained 5.9% to close Friday’s trading session at $336.84.

It’s no surprise that NEU has an overall grade of B, which equates to a Buy rating in our POWR Ratings system. In addition, the stock has a B grade for Value, Stability, and Sentiment.

NEU is ranked #10 in the same industry. Click here to see the additional POWR Ratings for NEU (Growth, Quality, and Momentum).

DOW shares were trading at $60.29 per share on Monday afternoon, up $3.48 (+6.13%). Year-to-date, DOW has gained 12.15%, versus a 19.80% rise in the benchmark S&P 500 index during the same period.

Riddhima is a financial journalist with a passion for analyzing financial instruments. With a master's degree in economics, she helps investors make informed investment decisions through her insightful commentaries.

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