CHICAGO, Sept. 7, 2012 /PRNewswire/ -- Today, Zacks Equity Research discusses the U.S. Chemicals, including E.I. DuPont de Nemours & Co. (NYSE:DD), Eastman Chemical Company (NYSE:EMN), Celanese Corp. (NYSE:CE) and Agrium Inc. (NYSE:AGU).
(Logo: http://photos.prnewswire.com/prnh/20101027/ZIRLOGO)
A synopsis of today's Industry Outlook is presented below. The full article can be read at
http://www.zacks.com/stock/news/82413/chemical-industry-stock-outlook-sept-2012
According to the ACC, emerging market growth and abundant shale gas should help drive U.S. chemical exports. A string of factors are driving growth in the export markets including favorable energy costs stemming from the abundance of shale gas and strong demand from the emerging markets. Affordable natural gas and ethane (derived from shale gas) offer U.S. producers a compelling cost advantage over their global counterparts who use a more expensive, oil-based feedstock.
Further, cost-cutting measures implemented by chemical companies, such as plant closures, aggressive cost containment and production improvement initiatives, should yield industry-wide margin improvements. Cash flows derived through these actions can be used for growth.
Mergers and acquisitions offer chemical companies another means to shore up growth in this difficult scenario. These companies remain focused on exploring growth opportunities in the fast-growing emerging markets, particularly in the lucrative regions of Asia-Pacific and Latin America such as China and Brazil.
We feel that chemical companies with strong earnings quality, healthy growth trajectory and liquidity profiles are better placed in the current rickety market environment considering their ability to leverage strong balance sheet and cash flows in maximizing shareholder value in form of dividends and share repurchases or use them for value acquisitions.
Some of the key end-markets for chemical products are on an uptrend. This has been evident from the recent earnings reports of leading chemical players. E.I. DuPont de Nemours & Co. (NYSE:DD), for example, put up a healthy performance in the recently reported quarter. The company saw strong performance in agriculture, food and bioscience businesses, along with its advanced materials business, which witnessed healthy results despite weak European markets. The Danisco acquisition contributed to higher sales in the quarter.
Eastman Chemical Company EMN) is well placed to benefit from its acquisition of Solutia. The company's diversified chemical portfolio, along with its integrated and diverse downstream businesses, is driving earnings. The company benefits from business restructuring, cost-cutting measures and increased capacity additions.
We also hold a favorable view on Celanese Corp. (NYSE:CE) despite the challenges it faces in Europe. We like the company's initiatives to improve margins and profits by running its plants better and controlling expenses, which should yield results through the rest of 2012. The company's strong presence in emerging markets, especially in China, will enable it to deliver incremental earnings in 2012. We are also upbeat about the prospect of its TCX ethanol process technology.
In agricultural chemical space, we like the prospects of
Agrium Inc. AGU). Fertilizer stocks like Agrium stands to gain from the U.S. Midwest drought in the remainder of 2012. The company has logged a solid second quarter and is poised to benefit from skyrocketing crop prices and overall strong fundamentals for the agriculture and crop input market. High crop prices (especially for corn) and tight grain inventories are expected to create huge demand for its nutrients.
Zacks "Profit from the Pros" e-mail newsletter provides highlights of the latest analysis from Zacks Equity Research. Subscribe to this free newsletter today by visiting http://at.zacks.com/?id=2679.
About Zacks
Zacks.com is a property of Zacks Investment Research, Inc., which was formed in 1978 by Leonard Zacks. As a PhD from MIT Len knew he could find patterns in stock market data that would lead to superior investment results. Amongst his many accomplishments was the formation of his proprietary stock picking system; the Zacks Rank, which continues to outperform the market by nearly a 3 to 1 margin. The best way to unlock the profitable stock recommendations and market insights of Zacks Investment
Research is through our free daily email newsletter; Profit from the Pros. In short, it's your steady flow of Profitable ideas GUARANTEED to be worth your time! Register for your free subscription to Profit from the Pros at http://at.zacks.com/?id=4581.
Visit http://www.zacks.com/performance for information about the performance numbers displayed in this press release.
Follow us on Twitter: http://twitter.com/zacksresearch
Join us on Facebook: http://www.facebook.com/ZacksInvestmentResearch
Disclaimer: Past performance does not guarantee future results. Investors should always research companies and securities before making any investments. Nothing herein should be construed as an offer or solicitation to buy or sell any security.
Media Contact
Zacks Investment Research
800-767-3771 ext. 9339
SOURCE Zacks Investment Research, Inc.
Share this article