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The materials sector includes companies engaged in the discovery, development, and processing of raw materials, which are used across a broad range of sectors and industries. Materials stocks include manufacturers of products as varied as plastic, fertilizer, paper, concrete, and metals. Prominent names include Ecolab Inc. (ECL), Air Products and Chemicals Inc. (APD), and DuPont de Nemours Inc. (DD).
Materials stocks, as represented by the Materials Select Sector SPDR ETF (XLB), have outperformed the broader market. The XLB has provided a total return of 26.9% over the past 12 months, above the Russell 1000’s total return of 21.0%, as of February 22, 2021. All statistics in the tables below are as of February 22.
Here are the top 3 materials stocks with the best value, the fastest growth, and the most momentum.
Best Value Materials Stocks
These are the materials stocks with the lowest 12-month trailing price-to-earnings (P/E) ratio. Because profits can be returned to shareholders in the form of dividends and buybacks, a low P/E ratio shows you’re paying less for each dollar of profit generated.
Source: YCharts
- Huntsman Corp.: Huntsman is a manufacturer of specialty chemical products, including textile chemicals, dyes, and advanced polyurethane-based formulations. For Q4 2020, Huntsman posted a 16.9% year-over-year (YOY) increase to net income and a 0.7% YOY increase in revenues. The company’s results were bolstered by higher average selling prices of some of its polyurethane products.
- Celanese Corp.: Celanese is a global chemical and specialty materials company that makes and designs a broad range of products. This includes materials that are critical to the global paints and coatings industries, and materials solutions that improve the quality of automotive, medical, food and beverage products.
- MDU Resources Group Inc.: MDU Resources Group provides distribution of natural gas, electricity, and construction materials. The company also offers construction services to customers across the U.S. On February 11, MDU Resources’ board of directors announced a quarterly dividend of $0.2125 per common share. The dividend, which is unchanged from the previous quarter, will be paid on April 1 to shareholders of record as of March 11.
Fastest Growing Materials Stocks
These are the materials stocks with the highest YOY earnings per share (EPS) growth for the most recent quarter. Rising earnings show that a company’s business is growing and is generating more money that it can reinvest or return to shareholders.
Source: YCharts
- Freeport-McMoRan Inc.: Freeport-McMoRan is a leading international mining company focused primarily on copper, gold, molybdenum. It owns significant reserves of all of these metals. The company saw revenues increase by 14.9% YOY and net income attributable to common stock leap upward by nearly 79 times to $708 million for Q4 2020. Adjusted net income attributable to common stock was lower, totaling $566 million. The lower number was after adjusting for items including net credits associated with a gain on sale of assets, partly offset by charges for a litigation settlement and international tax matters.
- Celanese Corp.: See above for company description.
- Univar Solutions Inc.: Univar Solutions is an industrial and specialty chemicals company that provides products and services to a broad range of sectors, including manufacturing food, oil and gas, and pharmaceuticals.
Materials Stocks with the Most Momentum
These are the materials stocks that had the highest total return over the last 12 months.
| Materials Stocks with the Most Momentum | |||
|---|---|---|---|
| Price ($) | Market Cap ($B) | 12-Month Trailing Total Return (%) | |
| Freeport-McMoRan Inc. (FCX) | 38.08 | 55.6 | 218.9 |
| Southern Copper Corp. (SCCO) | 81.53 | 63.0 | 125.3 |
| The Scotts Miracle-Gro Co. (SMG) | 225.66 | 12.6 | 95.0 |
| Russell 1000 | N/A | N/A | 21.0 |
| Materials Select Sector SPDR ETF (XLB) | N/A | N/A | 26.9 |
Source: YCharts
- Freeport-McMoRan Inc.: See company description above.
- Southern Copper Corp.: Southern Copper is engaged in the exploration, development, and production of copper. In the process, the company also produces several by-products including molybdenum, silver, zinc, and other metals.
- The Scotts Miracle-Gro Co.: Scotts Miracle-Gro is a multinational company offering branded consumer lawn and garden products, as well as products for professional horticulture. It manufactures fertilizers, pest controls, plant foods, gardening soils, grass seed, and more. The company also provides lawn service. For Q1 FY 2021 ended January 2, 2021, the company reported its first-ever profit for a fiscal first quarter. Sales more than doubled for the quarter. Scotts Miracle-Gro posted net income of $25.2 million for the quarter versus net loss of $71.3 million for Q1 FY 2020. A portion of the performance can be attributed to the calendar, as the company’s Q1 FY 2021 had five more days than Q1 FY 2020.
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