Top Materials Stocks for February 2022

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 an exchange-traded fund (ETF)—the Materials Select Sector SPDR ETF (XLB)—have slightly underperformed the broader market. The XLB’s total return was 18.4% over the past 12 months, below the benchmark Russell 1000’s total return of 20.0%. These market performance numbers and all statistics in the tables below are as of Jan. 18, 2022.

Here are the top three 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 that you’re paying less for each dollar of profit generated.

^{Source: YCharts}

• United States Steel Corp.: United States Steel is a manufacturer and seller of steel products. It operates through three business segments: Flat-rolled products, U.S. Steel Europe, and tubular products. On Jan. 11, the company announced that it plans to break ground during the first quarter of 2022 on a $3 billion project to build a next-generation, technologically advanced steelmaking facility in Arkansas. When completed by 2024, the new steelmaking facility in combination with Big River Steel will create a new 6.3 million ton steel mill.
• Cleveland-Cliffs Inc.: Cleveland-Cliffs is a major North American flat-rolled steel producer and supplier of iron ore pellets. The company also supplies stainless steel tubing and other products. For Q3 2021, ended Sept. 30, 2021, Cleveland-Cliffs reported that net income grew to nearly $1.3 billion from $2 million in Q3 2020. Over the same period, revenue surged by more than 250%. Strong sales growth of steel products was a key driver of the company’s performance.
• Steel Dynamics Inc.: Steel Dynamics is a carbon-steel producer and metals recycler. The company offers products including flat-rolled steel sheet, structural beams, and engineered bar special-bar-quality. On Dec. 16, 2021, Steel Dynamics announced Q4 2021 earnings guidance in the range of $5.46 to $5.50 per diluted share, representing record quarterly performance. Q4 2020 earnings were $0.89 per diluted share. The company’s strong Q4 2021 guidance is driven by robust steel demand, including strong orders in the nonresidential construction sector.

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 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 figure or the other unrepresentative of the business in general. Companies with quarterly EPS or revenue growth of more than 2,500% were excluded as outliers.

^{Source: YCharts}

• LyondellBasell Industries N.V.: LyondellBasell Industries is a chemical company. It manufactures plastics and chemicals used to make food packaging, home furnishings, automotive components, paints and coatings, and similar items. On Dec. 13, 2021, the company announced the appointment of Peter Vanacker, President and CEO of Neste Corporation, as its new CEO. Mr. Vanacker succeeds Bhavesh V. (Bob) Patel, who has been at the helm since January 2015.
• Nucor Corp.: Nucor manufacturers steel and steel products, with operations in the United States, Canada, and Mexico. Nucor also brokers ferrous and non-ferrous metals and pig iron, supplies ferro-alloys, and processes ferrous and nonferrous scrap. On Dec. 15, 2021, Nucor forecast that its Q4 2021 earnings will be its highest quarterly earnings in history. Nucor also forecast that all of 2021 would be its most profitable year ever and that profits will be strong in 2022.
• Steel Dynamics Inc.: See above for company description.

These are the materials stocks that had the highest total return over the past 12 months.

^{Source: YCharts}

• Alcoa Corp.: Alcoa is a leading producer of aluminum, bauxite, and alumina products. The company serves customers in the aluminum industry around the world. On Jan. 19, Alcoa Corp. reported its full year 2021 results, posting its record highest annual net income of $429 million and earnings per share of $2.26. The company attributed the record results to its solid operational performance and higher alumina and aluminum prices.
• 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.
• Nucor Corp.: See above for company description.

The comments, opinions, and analyses expressed herein are for informational purposes only and should not be considered individual investment advice or recommendations to invest in any security or adopt any investment strategy. Though we believe the information provided herein is reliable, we do not warrant its accuracy or completeness. The views and strategies described in our content may not be suitable for all investors. Because market and economic conditions are subject to rapid change, all comments, opinions, and analyses contained within our content are rendered as of the date of the posting and may change without notice. The material is not intended as a complete analysis of every material fact regarding any country, region, market, industry, investment, or strategy.

View Article Origin Here