Due to its various use cases and integration of advanced technologies, the chemicals industry is expected to stay buoyed in the foreseeable future. To that end, investors could look to buy fundamentally strong chemical stocks Linde plc (LIN), Akzo Nobel N.V. (AKZOY), Orion S.A. (OEC), and AdvanSix Inc. (ASIX).

The chemical industry supports a wide range of manufacturing sectors, including automotive, agriculture, healthcare, construction, textiles and apparel, and electronics.

Global chemical producers increasingly use digital technologies like Artificial Intelligence (AI) and Machine Learning (ML) to empower materials innovation, expedite low-cost formulations, improve supply chains, and promote sustainability.

Moreover, with significant prospects in end-use markets, the global specialty chemical market is expected to reach an estimated $879.10 billion by 2028, expanding at a CAGR of 4.9% from 2023 to 2028. 

Furthermore, chemical companies are transforming to eliminate the negative impact of chemical manufacturing on the environment by adopting sustainable and eco-friendly processes. The global chemicals market is expected to grow to $6.37 trillion in 2026 at a CAGR of 8.4%.

Considering these factors, investors could look to buy the featured chemical stocks. Let’s take a closer look at their fundamentals.

Linde plc (LIN)  

Based in Woking, the United Kingdom, LIN operates as an industrial gas company worldwide. It offers atmospheric gases and process gases. It serves a range of industries, including healthcare, chemicals and energy, manufacturing, metals and mining, food and beverage, and electronics.

On April 4, LIN announced that it had signed a long-term agreement with Exxon Mobil Corporation (XOM). LIN’s Senior Vice President Americas, Dan Yankowski, believes that working with XOM as the carbon dioxide off-taker at LIN’s Beaumont project supports the company’s strategy to decarbonize customer processes while safely and reliably supplying low-carbon hydrogen at scale.

In terms of the trailing-12-month EBIT margin, LIN’s 21.33% is 85.3% higher than the 11.51% industry average. Its 14.41% levered FCF margin is 305.5% higher than the 3.55% industry average. Likewise, its 13.46% trailing-12-month net income margin is 89.1% higher than the industry average of 7.12%.  

For the fiscal first quarter ended March 31, 2023, LIN’s adjusted operating profit increased 15.8% year-over-year to $2.21 billion. The company’s adjusted net income increased 12.9% year-over-year to $1.69 billion.

Its adjusted EBITDA increased 11.3% year-over-year to $2.96 billion. In addition, its adjusted EPS came in at $3.42, representing an increase of 16.7% from the year-ago quarter.

LIN’s EPS and revenue for the quarter ending June 30, 2023, are expected to increase 12.4% and 2.9% year-over-year to $3.48 and $8.70 billion, respectively. It has an impressive earnings surprise history, surpassing the consensus EPS estimates in each of the trailing four quarters.

Over the past six months, the stock has gained 41.7% to close the last trading session at $375.75.   

LIN’s solid prospects are reflected in its POWR Ratings. It has an overall rating of B, which equates to Buy in our proprietary rating system. The POWR Ratings assess stocks by 118 different factors, each with its own weighting.

It is ranked #10 out of 84 stocks in the Chemicals industry. In addition, it has a B grade for Growth, Stability, Sentiment, and Quality.  

To see the other ratings of LIN for Value and Momentum, click here. 

Akzo Nobel N.V. (AKZOY)

Headquartered in Amsterdam, the Netherlands, AKZOY engages in the production and sale of paints and coatings worldwide. It offers decorative paints, a range of mixing machines, color concepts for the building and renovation industry, and specialty coatings.

In terms of the trailing-12-month gross profit margin, AKZOY’s 35.74x is 25.9% lower than the 28.39x industry average.

AKZOY’s revenue for the first quarter increased 5.2% year-year-over-year to €2.66 billion ($3.38 billion). Its gross profit increased marginally year-over-year to €982 million ($1.25 billion). Additionally, its adjusted EPS from continuing operations came in at €0.73.

AKZOY’s revenue for the quarter ending June 30, 2023, is expected to increase 6.2% year-over-year to $3.09 billion. Over the past nine months, the stock has gained 47.3% to close the last trading session at $26.61.

AKZOY’s POWR Ratings reflect solid prospects. The stock has an overall rating of B, equating to a Buy in our proprietary rating system. It is ranked #13 in the same industry. It has a B grade for Growth and Stability.  

In total, we rate AKZOY on eight different levels. Beyond what we stated above, we have also given AKZOY grades for Value, Momentum, Sentiment, and Quality. Click here to access all the ratings.

Orion S.A. (OEC)       

Headquartered in Senningerberg, Luxembourg, OEC manufactures and sells carbon black products internationally. It operates in two segments, Specialty Carbon Black and Rubber Carbon Black.

In terms of the trailing-12-month CAPEX/Sales, OEC’s 10.48% is 67.5% higher than the 6.26% industry average. Its 27.67% Return on Common Equity is 159.1% higher than the 10.68% industry average. Likewise, its 1.12x trailing-12-month asset turnover ratio is 50.3% higher than the industry average of 0.74x.  

For the fiscal first quarter ended March 31, 2023, OEC’s net sales increased 3.3% year-over-year to $500.70 million. The company’s gross profit increased 15.7% year-over-year to $136.40 million. Its income from operations increased 34.6% year-over-year to $73.50 million. In addition, its EPS increased 32.1% year-over-year to $0.70.

OEC’s EPS and revenue for the quarter ending September 30, 2023, are expected to increase 11.1% and 1.2% year-over-year to $0.63 and $549.83 million, respectively. It has a commendable earnings surprise history, surpassing the consensus EPS estimates in three of the trailing four quarters.

Over the past nine months, the stock has gained 52.4% to close the last trading session at $21.05.

OEC’s positive outlook is reflected in its POWR Ratings. The stock has an overall rating of B, equating to a Buy in our proprietary rating system. It is ranked #8 in the same industry. The stock has a B grade for Value. Click here to see the additional ratings of OEC for Growth, Momentum, Stability, Sentiment, and Quality.

AdvanSix Inc. (ASIX)

ASIX manufactures and sells polymer resins internationally. It offers Nylon 6, a polymer resin, which is a synthetic material used to produce fibers, filaments, engineered plastics, and films.

In terms of the trailing-12-month levered FCF margin, ASIX’s 5.96% is 67.8% higher than the 3.55% industry average. Its 20.30% Return on Common Equity is 90.1% higher than the 10.68% industry average. Likewise, its 1.29x trailing-12-month asset turnover ratio is 72.5% higher than the industry average of 0.74x.  

ASIX’s adjusted net income for the first quarter (ended March 31, 2023) came in at $37.06 million. Its adjusted EBITDA came in at $65.35 million. Additionally, its adjusted EPS came in at $1.30

Analysts expect ASIX’s EPS for the quarter ending September 30, 2023, to increase 9.3% year-over-year to $0.47. Its revenue for the quarter ending December 31, 2023, is expected to increase 3.6% year-over-year to $418.73 million.

It has a commendable earnings surprise history, surpassing the consensus EPS estimates in each of the trailing four quarters. Over the past nine months, the stock has gained 10.1% to close the last trading session at $34.50.

It is no surprise that ASIX has an overall rating of B, which translates to a Buy in our proprietary rating system. It is ranked #18 in the Chemicals industry. It has an A grade for Value and a B for Quality.

We have also given ASIX grades for Growth, Momentum, Stability, and Sentiment. Get all ASIX ratings here.

What To Do Next?

Get your hands on this special report with 3 low priced companies with tremendous upside potential even in today’s volatile markets:

3 Stocks to DOUBLE This Year >

LIN shares were trading at $374.36 per share on Wednesday afternoon, down $1.39 (-0.37%). Year-to-date, LIN has gained 15.62%, versus a 14.79% 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. More...

More Resources for the Stocks in this Article