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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 32.9% over the past 12 months, above the Russell 1000’s total return of 21.5%, as of January 12, 2021. All statistics in the tables below are as of January 12.
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. The company announced in early December that it had agreed to acquire Gabriel Performance Products, a specialty chemical manufacturer, for $250 million. The transaction is expected to close during Q1 2021.
- MDU Resources Group Inc.: MDU Resources Group provides distribution of natural gas, electricity, and construction materials. The company also offers construction services to customers across the U.S.
- Steel Dynamics Inc.: Steel Dynamics is a carbon steel producer and metals recycler. It offers a range of steel products, including flat rolled steel sheets and structural beams.
Fastest Growing Materials Stocks
These are the materials stocks with the highest year-over-year (YOY) earnings per share (EPS) growth for the most recent quarter. Rising earnings show that a company’s business is growing and is generating more money that it can reinvest or return to shareholders.
Source: YCharts
- Univar Solutions Inc.: Univar Solutions provides industrial and specialty chemicals, including solvents, resins, acids, bases, glycols, surfactants, pigments, and related products. The company caters to customers in industries such as food, oil and gas, and pharmaceuticals, among others.
- Huntsman Corp.: See above for company description.
- RPM International Inc.: RPM International manufactures and sells specialty chemicals including paints, sealants, adhesives, and roofing products. The company recently reported financial results for Q2 of its 2021 fiscal year (FY), which ended November 30, 2020. RPM reported an increase in net income of 65.7% on record sales that grew 6.0% compared to the year-ago quarter. Net income was boosted by lower selling, general & administrative expenses, and a lower interest expense compared to the same quarter a year ago.
Materials Stocks with the Most Momentum
These are the materials stocks that had the highest total return over the last 12 months.
| Materials Stocks with the Most Momentum | |||
|---|---|---|---|
| Price ($) | Market Cap ($B) | 12-Month Trailing Total Return (%) | |
| Albemarle Corp. (ALB) | 182.50 | 19.4 | 157.6 |
| Freeport-McMoRan Inc. (FCX) | 30.99 | 45.0 | 141.1 |
| The Scotts Miracle-Gro Co. (SMG) | 226.18 | 12.6 | 119.6 |
| Russell 1000 | N/A | N/A | 21.5 |
| Materials Select Sector SPDR ETF (XLB) | N/A | N/A | 32.9 |
Source: YCharts
- Albemarle Corp.: Albemarle produces specialty chemicals for consumer electronics, petroleum refining, utilities, packaging, construction, transportation, pharmaceuticals, and other industries. The company is focused primarily on lithium, bromine, and refining catalysts.
- Freeport-McMoRan Inc.: Freeport-McMoRan is a leading international mining company with significant reserves of copper, gold, molybdenum, cobalt, oil, and gas. The company announced in mid-December that it had completed the sale of its interests in the Kisanfu undeveloped cobalt and copper resource project, located in the Democratic Republic of Congo, to a wholly owned subsidiary of China Molybdenum Co. Ltd. for $550 million. Freeport, which discovered the resource in 2016, said the project was no longer strategic to its long-term strategy.
- 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. Scotts recently announced that Randy Coleman has departed the company as executive vice president and chief financial officer (CFO). Cory Miller has been promoted to the roles of senior vice president and interim CFO.
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