PPG: 3 Specialty Chemical Companies Gaining From Industrial Demand

Specialty chemicals are seeing a surge in demand as industries ramp up their needs. Key sectors like electronics, construction, automotive, and pharmaceuticals are driving this growth, fueling the rise in demand. As a result, the chemical industry is poised for stronger, more promising growth opportunities ahead.

Amid this backdrop, investors could scoop up shares of specialty chemical companies, Kronos Worldwide, Inc. (KRO), PPG Industries, Inc. (PPG), and Kuraray Co., Ltd. (KURRY). These stocks are well-positioned to benefit from increased industrial demand and bolster significant growth.

As industries like electronics, construction, automotive, and pharmaceuticals boom globally, the demand for chemicals in manufacturing is also skyrocketing. A report by TechNavio reveals that the specialty chemicals market is set to grow by $368.2 million by 2028 at an impressive 6.8% CAGR, driving major benefits for the sector.

Most of this growth is due to the rising demand from the agrochemical sector for the usage of specialty chemicals as inputs for producing high-performance pesticides and fertilizers and, in the construction industry, for the use of specialty chemicals as additives and performance enhancers in concrete and other building materials.

Furthermore, the American Chemistry Council (ACC) predicts global chemical production will grow by 3.4% in 2024 and 3.5% in 2025, fueled by this increased demand.

Now, let us dive deep into the fundamentals of three Chemicals stocks, starting with #3.

Stock #3: Kronos Worldwide, Inc. (KRO)

KRO produces and markets value-added titanium dioxide pigments (TiO2). These pigments are used in coatings, plastics, paper, and specialty products like inks, cosmetics, and pharmaceuticals. The company offers over 50 different TiO2 pigment grades and manufactures iron-based chemicals and specialty chemicals.

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On July 17, KRO announced its acquisition of the remaining 50% interest in Louisiana Pigment Company, L.P., where it previously held a 50% stake. The acquisition provides a unique opportunity for KRO to enhance customer value and strengthen its service to the North American market.

For the fiscal 2024 third quarter that ended September 30, KRO’s net sales increased 22.1% year-over-year to $484.70 million. Its income from operations came in at $38.90 million, compared to a loss of $25.30 million in the prior year’s quarter.

Additionally, the company’s net income and net income per share amounted to $71.80 million and $0.62, compared to a net loss and loss per share of $20.40 million and $0.18 in the previous year’s quarter, respectively.

Analysts expect KRO’s revenue and EPS for the fiscal year ending December 2025 to increase 4.1% and 41% year-over-year to $2.32 billion and $0.97, respectively.

Shares of KRO have surged 36.3% over the past nine months and 41.1% over the past year to close the last trading session at $11.71.

KRO’s POWR Ratings reflect its sound fundamentals. The stock has an overall rating of B, which equates to a Buy in our proprietary rating system. The POWR Ratings assess stocks by 118 different factors, each with its own weighting.

KRO has an A grade for Growth and a B for Value. In the B-rated Chemicals industry, it is ranked #13 out of 80 stocks.

In addition to the POWR Rating highlighted above, you can check KRO’s ratings for Stability, Quality, Momentum, and Sentiment here.

Stock #2: PPG Industries, Inc. (PPG)

PPG is involved in the manufacture and distribution of paints, coatings, and specialty materials. The company’s two operational segments include: Performance Coatings and Industrial Coatings. Its brand offerings include PPG, GLIDDEN, COMEX, OLYMPIC, DULUX, SIGMA, HISTOR etc.

On November 18, PPG formed a strategic partnership with SARO/Siccardi, Italy’s largest powder coatings distributor. The collaboration could strengthen PPG’s distribution network in Italy, enabling it to expand its market presence, enhance accessibility, and position itself as a leader in the Italian powder coatings market.

On October 17, PPG agreed to sell its U.S. and Canadian architectural coatings business to American Industrial Partners for $550 million. The strategic move would allow PPG to streamline its portfolio, focus on core growth areas, and enhance its financial flexibility for future investments and innovations.

For the fiscal 2024 third quarter that ended September 30, PPG’s net sales came in at $4.58 billion. Its adjusted net income and adjusted EPS increased 1.4% and 2.9% year-over-year to $500 million and $2.13, respectively.

Moreover, as of September 30, 2024, PPG’s total current assets stood at $7.91 billion, compared to $7.43 billion on December 31, 2023.

For the fiscal fourth quarter ending December 2024, Street expects PPG’s revenue to come in at $4.16 billion. Additionally, its EPS is expected to increase 8.2% year-over-year to $1.66 for the ongoing quarter.

PPG’s shares marginally declined intra-day to close the last trading session at $122.47.

PPG’s strong fundamentals are mirrored in its POWR Ratings. The stock has an overall rating of A, translating to a Strong Buy in our proprietary rating system.

PPG has a B grade for Growth, Stability and Quality. It is ranked #6 out of 80 stocks in the Chemicals industry.

Click here to access PPG’s ratings for Value, Momentum, and Sentiment.

Stock #1: Kuraray Co., Ltd. (KURRY)

Headquartered in Tokyo, Japan, KURRY produces and sells resins, chemicals, fibers, activated carbon, and high-performance membranes and systems. The company operates through five key segments: Vinyl Acetate; Isoprene; Functional Materials; Fibers and Textiles; and Trading.

On November 14, KURRY secured ISCC PLUS certification for six vinyl acetate-related products across four production sites in Europe and the United States. The achievement could strengthen KURRY’s commitment to sustainability, enhancing its market competitiveness and appeal to eco-conscious customers.

For the fiscal 2024 third quarter that ended September 30, KURRY’s net sales increased 7% year-over-year to ¥614.83 billion ($3.98 billion). Its operating income rose 19.8% from the year-ago value to ¥73.92 billion ($478.05 million). Plus, net income attributable to owners of the parent grew 27.8% from the prior year’s quarter to ¥46.63 billion ($301.57 million).

The consensus revenue estimates of $1.41 billion for the fiscal fourth quarter ending December 2024 exhibits a year-over-year rise of 2.3%. In addition, for the full fiscal year ending in December 2024, analysts estimate the company’s revenue to rise 219% from the prior year to $5.42 billion.

Shares of KURRY have gained 18.3% over the past nine months, closing the last trading session at $36.75.

KURRY’s POWR Ratings reflect solid prospects. It has an overall rating of A, which translates to a Strong Buy in our proprietary rating system.

KURRY has an A grade for Stability and a B for Value, and Quality. It is ranked #3 in the same industry.

Click here to access KURRY’s ratings for Momentum, Growth, and Sentiment.

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PPG shares were trading at $122.33 per share on Friday morning, down $0.35 (-0.29%). Year-to-date, PPG has declined -16.49%, versus a 26.22% rise in the benchmark S&P 500 index during the same period.

About the Author: Aanchal Sugandh

Aanchal's passion for financial markets drives her work as an investment analyst and journalist. She earned her bachelor's degree in finance and is pursuing the CFA program. She is proficient at assessing the long-term prospects of stocks with her fundamental analysis skills. Her goal is to help investors build portfolios with sustainable returns. More...