Despite facing multiple macroeconomic headwinds of supply chain disruptions, rising raw material costs, and geopolitical issues, the chemical sector has remained resilient over the past year. Therefore, investors could benefit from fundamentally strong chemical stocks Mitsubishi Chemical Group Corporation (MTLHY), NewMarket Corporation (NEU), and ChromaDex Corporation (CDXC) with solid historical growth.
Thanks to the widespread use of chemicals across industries, and rapid innovations, the chemical industry is expanding. Moreover, with the industry playing a crucial role in tackling climate change, driving the urgency for change and optimization, it has a significant growth potential in the long term.
Despite current market volatility expected to keep various industries under pressure, the chemical sector continues to be a large contributor to the global economy and is projected to keep evolving as technology continues to advance. The global chemicals market is expected to grow to $6.37 billion in 2026 at a CAGR of 8.4%.
Given these factors, investors could look out for the featured chemical stocks. Let’s take a closer look at their fundamentals.
Mitsubishi Chemical Group Corporation (MTLHY)
Headquartered in Tokyo, Japan, MTLHY provides performance products, chemicals, industrial gases, health care products, and other products worldwide. In addition, the company offers engineering, transportation, and warehousing services.
MTLHY’s EBIT grew at a CAGR of 20% over the past three years. Its net income grew at a CAGR of 21.1% over the past three years. Moreover, its revenue grew at a CAGR of 9% over the past three years.
In terms of the trailing-12-month asset turnover ratio, MTHLY’s 0.82x is 9.6% higher than the 0.74x industry average.
MTLHY’s sales and revenues for the fiscal year ended March 31, 2023, increased 16.5% year-over-year to ¥4.63 trillion ($33.21 billion). Its gross profit increased 11.2% year-over-year to ¥1.24 trillion ($8.88 billion). Additionally, its EPS came in at ¥64.72.
Over the past nine months, MTLHY has gained 32.8% to close the last trading session at $29.35.
MTLHY’s solid outlook is reflected in its POWR Ratings. The stock has an overall rating of A, which equates to a Strong Buy. The POWR Ratings assess stocks by 118 different factors, each with its own weighting.
It is ranked #1 of 84 stocks in the Chemicals industry. Moreover, it has an A grade for Growth, Value, and Stability and a B grade for Quality.
To access the other ratings of MTLHY for Momentum and Sentiment, click here.
NewMarket Corporation (NEU)
NEU primarily engages in the manufacture and sale of petroleum additives. The company offers lubricant additives for use in various vehicle and industrial applications, engine oil additives, and industrial additives designed for products for industrial applications and industrial specialty applications.
NEU’s revenue grew at a CAGR of 8.2% over the past three years. Its EPS grew at a CAGR of 8.9% over the past three years. Also, its total assets grew at a CAGR of 6.7% in the same time frame.
In terms of the trailing-12-month net income margin, NEU’s 11.33% is 57.9% higher than the 7.18% industry average. Likewise, its 40.05% trailing-12-month Return on Common Equity is 275% higher than the industry average of 10.68%. Furthermore, the stock’s 1.21x trailing-12-month asset turnover ratio is 62.6% higher than the industry average of 0.74x.
NEU’s total revenue for the fiscal first quarter ended March 31, 2023, increased 6.1% year-over-year to $702.79 million. The company’s net income increased 64.5% year-over-year to $97.58 million. In addition, its EPS came in at $10.09, representing a 75.5% increase over the prior-year quarter.
Over the past year, the stock has gained 42% to close the last trading session at $431.65.
It is no surprise that NEU has an overall rating of A, which equates to a Strong Buy in our proprietary rating system. It is ranked #3 in the same industry. In addition, it has a B grade for Growth, Value, Stability, Sentiment, and Quality.
Click here to see an additional rating of NEU for Momentum.
ChromaDex Corporation (CDXC)
CDXC operates as a bioscience company focusing on developing healthy aging products. The company operates through three segments: Consumer products; Ingredients; and Analytical Reference Standards and Services.
CDXC’s total assets grew at a CAGR of 14.7% over the past three years. Likewise, its revenue grew at a CAGR of 15.2% over the past three years.
In terms of the trailing-12-month gross profit margin, CDXC’s 59.19% is 6.5% higher than the 55.60% industry average. Likewise, its 1.45x trailing-12-month asset turnover ratio is 309.4% higher than the industry average of 0.35x.
For the fiscal first quarter that ended March 31, 2023, CDXC’s net sales increased 30.7% year-over-year to $22.56 million. The company’s gross profit increased 28.4% year-over-year to $13.52 million. Its net cash provided by operating activities came in at a $2.79 million, compared to $7.20 million used in operating activities for the prior-year quarter.
Analysts expect CDXC’s revenue for the quarter ending September 30, 2023, to increase 19.3% year-over-year to $20.36 million. It has an impressive earnings surprise history, surpassing its consensus EPS estimates in three of the trailing four quarters. Over the past three months, the stock has gained 19.7% to close the last trading session at $1.77.
CDXC’s strong outlook reflected in its POWR Ratings. The stock has an overall rating of A, equating to a Strong Buy in our proprietary rating system. It is ranked #2 in the Chemicals industry. It has an A grade for Growth and a B for Value, Sentiment, and Quality.
We have also given CDXC grades for Momentum and Stability. Get all CDXC ratings here.
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MTLHY shares were trading at $29.35 per share on Thursday afternoon, down $1.07 (-3.52%). Year-to-date, MTLHY has gained 17.78%, versus a 19.45% rise in the benchmark S&P 500 index during the same period.
About the Author: Malaika Alphonsus
Malaika's passion for writing and interest in financial markets led her to pursue a career in investment research. With a degree in Economics and Psychology, she intends to assist investors in making informed investment decisions.
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