The chemical industry is one of the United States' largest manufacturing industries, serving a sizable domestic and expanding global market. Despite concerns related to carbon emissions, supply chain issues, and high input costs, the recovery of the chemical industry has been primarily driven by strong demand for both commodity and specialty chemicals.
The need for chemicals is expected to increase with the rising use in significant-end markets such as automotive and construction. Moreover, rapid business transformation through advanced technologies is expected to boost the chemical industry's growth in the upcoming years. According to a Verified Market Research report, the global specialty chemicals market is expected to grow at a CAGR of 6.2% by 2028.
As the chemical industry prospects look promising, it could be wise to scoop up the shares of Kronos Worldwide, Inc. (KRO) and Sisecam Resources LP (SIRE), which are financially sound enough to capitalize on the industry tailwinds.
Kronos Worldwide, Inc. (KRO)
KRO produces and markets titanium dioxide pigments internationally. It also produces ilmenite, iron-based chemicals, titanium oxychloride, and titanyl sulfate. In addition, the company provides technical services for its products. It sells its products under the KRONOS brand through agents and distributors.
On May 18, 2022, KRO announced that its board of directors had declared a regular quarterly dividend of $0.19 per share on its common stock, payable on June 16, 2022, to stockholders of record at the close of business on June 6, 2022.
KRO’s net sales increased 24% year-over-year to $562.90 million for the first quarter ended March 31, 2022. Its EBITDA grew 115.2% year-over-year to $93.20 million, while its net income increased 193.4% year-over-year to $57.50 million. Also, its EPS increased 194.1% year-over-year to $0.50.
Analysts expect KRO’s EPS and revenue to increase 102% and 16.3% year-over-year to $1.98 and $2.26 billion, respectively, in fiscal 2022. It surpassed the consensus EPS estimates in three of the trailing four quarters. Over the past nine months, the stock has gained 41.7% to close yesterday’s trading session at $18.38.
KRO’s POWR Ratings reflect this promising outlook. The company has an overall rating of A, which translates to a Strong Buy in our proprietary rating system. The stock has an A grade for Sentiment and a B grade for Growth, Stability, and Value.
Within the A-rated Chemicals industry, KRO is ranked #3 out of 92 stocks. Click here to see KRO’s ratings for Momentum and Quality.
Sisecam Resources LP (SIRE)
SIRE engages in the trona ore mining and soda ash production businesses internationally. The company holds approximately 23,500 acres of leased and licensed subsurface mining areas in the Green River Basin of Wyoming. It has proven and probable reserves of approximately 220 million short tons of trona.
On May 2, 2022, Ertugrul Kaloglu, CEO of SIRE, said, “2022 represents another major step in our transition to a direct global exporter, as we replace a significant portion of our international sales to ANSAC with direct sales arranged by us. We’ve seen success thus far cultivating our own export customer and distributor network, and we intend to further capitalize on increased flexibility, market presence, and international relationships.”
SIRE’s net sales increased 27.9% year-over-year to $163.40 million for the fiscal first quarter ended March 31, 2022. The company’s adjusted EBITDA grew 151% year-over-year to $39.40 million, while its net income came in at $31.80 million, representing a 467.9% year-over-year increase. Also, its earnings per limited partner unit came in at $0.78, up 550% year-over-year.
SIRE’s revenue is expected to come in at $2.44 billion in fiscal 2022, representing a 352.3% year-over-year increase. Over the past nine months, the stock has gained 35.6% to close yesterday’s trading session at $17.27.
SIRE’s POWR Ratings reflect solid prospects. The company has an overall rating of A, which translates to a Strong Buy in our proprietary rating system. In addition, it has an A grade for Growth and Sentiment and a B grade for Value, Stability, and Quality.
Click here to see the additional POWR Rating for SIRE (Momentum). SIRE is ranked #1 in the Chemicals industry.
KRO shares were trading at $18.30 per share on Tuesday morning, down $0.08 (-0.44%). Year-to-date, KRO has gained 24.73%, versus a -21.02% rise in the benchmark S&P 500 index during the same period.
About the Author: Nimesh Jaiswal
Nimesh Jaiswal's fervent interest in analyzing and interpreting financial data led him to a career as a financial analyst and journalist. The importance of financial statements in driving a stock’s price is the key approach that he follows while advising investors in his articles.
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