Chemical stocks have faced challenges in 2023, with sluggish global demand, a depressed economy, and inflation hindering growth. Despite these setbacks, the American Chemistry Council projects a potential rebound in 2025 and 2026. The industry is also benefiting from the energy transition towards renewable sources, presenting opportunities for growth, but also increasing competition from other industries with strong cash flows. Additionally, the U.S. Environmental Protection Agency has implemented regulations to improve risk evaluations on chemicals under the Toxic Substances Control Act, aiming to protect public health.
To assess the attractiveness of three chemical stocks—Celanese, Eastman Chemical, and PPG Industries—AAII’s A+ Stock Grades were used. Celanese, a global company specializing in engineered materials, received mixed grades, with an average Value Grade but a strong Quality Grade. Eastman Chemical, known for its specialty materials, received high grades in Quality and Momentum but a lower grade in Value. PPG Industries, a manufacturer of paints and coatings, scored highly in Quality but poorly in Momentum and Value, indicating potential areas of strength and weakness for investors to consider.
Celanese’s Value Grade was average, with a C rating, while its Earnings Estimate Revisions Grade was negative. However, the company’s Quality Grade was strong, with a B rating. Eastman Chemical performed well across Quality, Momentum, and Value, scoring high in each category. PPG Industries excelled in Quality but lagged in Value and Momentum, suggesting a mixed outlook for potential investors.
While these grades provide valuable insights into the financial health and performance of these chemical stocks, it is essential for investors to conduct thorough due diligence before making any investment decisions. The analysis presented here serves as a starting point for evaluating potential investment opportunities in the chemical sector. For those seeking an edge in the market, becoming an AAII member may provide additional resources and guidance during market volatility.
