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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, represented by the Materials Select Sector SPDR ETF (XLB), have outperformed the broader market as the outlook for a global economic recovery has brightened. The XLB’s total return was 67.7% over the past 12 months, beating the Russell 1000’s total return of 52.2%. These market performance numbers and all statistics in the tables below are as of April 16, 2021.
Here are the top 3 materials stocks with the best value, the fastest growth, and the most momentum.
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. The company announced in early April that Sean Douglas is resigning as executive vice president and chief financial officer (CFO) to accept a full-time role at The Church of Jesus Christ of Latter-day Saints. Huntsman expects to hire a new CFO before July 1, 2021, the effective date of Douglas’ resignation.
- Celanese Corp.: Celanese is a global producer of chemicals and advanced materials. It produces acetyl, acetate, vinyl emulsion, and engineered polymers.
- NewMarket Corp.: NewMarket develops and manufactures fuel and lubricant additives for refiners and other companies that sell petroleum products. Its products are used in transportation and industrial equipment. The company announced in early February financial results for its 2020 fiscal year (FY), which ended Dec. 31, 2020. Annual net income rose 6.4%, benefitting from a gain of $16.5 million related to the sale of a non-operating parcel of real estate as well as a reduced effective tax rate compared to the prior year. Net sales, however, declined 8.2%. Lower costs of goods sold and operating expenses as well as significantly higher other income compared to the prior year helped to boost net income.
These are the top materials stocks as ranked by a growth model that scores companies based on a 50/50 weighting of their most recent quarterly year-over-year (YOY) percentage revenue growth and their most recent quarterly YOY earnings-per-share (EPS) growth. Both sales and earnings are critical factors in the success of a company. Therefore ranking companies by only one growth metric makes a ranking susceptible to the accounting anomalies of that quarter (such as changes in tax law or restructuring costs) that may make one or the other figure unrepresentative of the business in general. Companies with quarterly EPS or revenue growth of over 2,500% were excluded as outliers.
Source: YCharts
- Southern Copper Corp.: Southern Copper explores, develops, and produces copper. In the process, the company also produces several by-products including molybdenum, silver, zinc, sulfuric acid, and other metals.
- Nucor Corp.: Nucor manufactures steel and steel products. Its products include carbon and steel alloy, steel joints, steel deck, steel grinding balls, metal building systems, and more. The company also provides ferrous and nonferrous metals.
- RPM International Inc.: RPM International manufactures various specialty chemical products, including specialty paints, protective coatings, roofing systems, sealants, and adhesives. It serves both industrial and consumer markets. The company announced in early April financial results for Q3 FY 2021, the three-month period ended Feb. 28, 2021. Quarterly net income rose 218.2% while net sales grew 8.1% compared to the year-ago quarter. Net income was boosted by lower restructuring charges and interest expenses, and by net investment income compared to a net investment loss in the year-ago quarter.
These are the materials stocks that had the highest total return over the last 12 months.
Source: YCharts
- Freeport-McMoRan Inc.: Freeport-McMoRan is a leading international mining company with significant reserves of copper, gold, molybdenum, cobalt, oil, and gas.
- The Chemours Co.: Chemours is a manufacturer and distributor of performance chemicals for a broad range of industries, including agriculture, oil refining and gold production. Chemours announced in early February full-year financial results for FY 2020, which ended Dec. 31, 2020. The company posted annual net income of $219 million compared to a net loss of $52 million in the previous year. The latest annual profit benefited from factors including lower cost of goods sold, lower operating expenses, and other income. Annual net sales fell 10.1%.
- Olin Corp.: Olin manufactures and distributes chemical products, such as chlorine and caustic soda, vinyls, epoxies, chlorinated organics, bleach, and hydrochloric acid. It also makes sporting ammunition and small caliber military ammunition.
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