The materials industry has seen significant growth driven by escalating demand in sectors such as construction, technology, and agriculture. Increased infrastructure investment and the rising need for specialty chemicals in electronics, automotive, and pharmaceuticals have propelled the demand for steel and chemicals.

Amid this backdrop, investing in fundamentally stable materials stocks, Tenaris S.A. (TS), ICL Group Ltd (ICL), and Kronos Worldwide, Inc. (KRO) could be the move for investors looking to capitalize on this growing demand.

Steel remains essential for large-scale infrastructure projects, with the U.S. Census Bureau reporting a 3% increase in construction spending in November 2024, signaling strong demand. Meanwhile, global economic growth fuels rising demand for chemicals, particularly in the agrochemical sector, where specialty chemicals are vital for producing advanced pesticides and fertilizers.

Further, a report by TechNavio reveals that the specialty chemicals market is set to grow by $368.20 million by 2028 at a 6.8% CAGR. This surge underscores the sector’s robust potential.

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

Tenaris S.A. (TS)

Headquartered in Luxembourg City, Luxembourg, TS manufactures and distributes steel pipes for the energy industry and other industrial applications. The company’s offerings include steel casings, steel tubing, steel line pipes. storage tanks and loading and distribution centers, mechanical and structural pipes and more.

TS’ trailing-12-month net income margin of 20.23% is 76.6% higher than the industry average of 11.45%. Its trailing-12-month levered FCF margin of 15.12% is 117.8% higher than the sector average of 6.94%. Likewise, the stock’s asset turnover ratio of 0.64x is 35.4% higher than the industry average of 0.47x.

For the fiscal 2024 third quarter that ended September 30, TS’ net sales came in at $2.92 billion. Its operating income was reported to be $537.10 million. Additionally, the company’s net income and EPS amounted to $459 million and $0.40, respectively.

Analysts expect TS’ revenue for the fiscal year ending December 2025 to come in at $12.43 billion. Its EPS for the same period is expected to increase 3.3% year-over-year to $3.59. Moreover, the company surpassed consensus revenue estimates in each of the four trailing quarters, which is noteworthy.

Shares of TS surged 21.8% over the past three months and 25.7% over the past six months to close the last trading session at $39.23.

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

TS has a B grade for Stability, Sentiment, and Quality. Within the Steel industry, it is ranked #7 out of 30 stocks.

In addition to the POWR Rating highlighted above, you can check TS’ ratings for Growth, Momentum, and Value here.

ICL Group Ltd (ICL)

Headquartered in Tel Aviv, Israel, ICL is a specialty minerals and chemicals company. The company has four segments: Industrial Products; Potash; Phosphate Solutions; and Growing Solutions.

On December 13, 2024, ICL announced the launch of VeriQuel R100, an innovative, reactive phosphorus flame retardant (FR) designed for rigid polyurethane insulation products. The new release aims to provide manufacturers with a high-performance, environmentally responsible solution without compromising on fire safety.

ICL’s trailing-12-month gross profit margin of 32.91% is 12.9% higher than the industry average of 36.19%. Its trailing-12-month EBITDA margin of 18.08% is 10.2% higher than the 16.41% industry average. Additionally, the stock’s trailing-12-month net income margin of 5.83% is 20.2% higher than the sector average of 4.85%.

For the fiscal 2024 third quarter that ended September 30, ICL’s sales came in at $1.75 billion. Its adjusted operating income increased 7% year-over-year to $243 million.

Moreover, adjusted net income attributable to shareholders and adjusted EPS amounted to $113 million and $0.11, respectively.

Street expects ICL’s revenue and EPS for the fiscal year ending December 2025 to increase 5.3% and 15.8% year-over-year to $7.31 billion and $0.44, respectively. Moreover, the company has surpassed consensus EPS estimates in all four trailing quarters, which is impressive.

ICL’s shares have surged 11.2% over the past month and 42.1% over the past three months to close the last trading session at $5.67.

ICL’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.

ICL has a B grade for Value, Sentiment, Quality, and Stability. The stock has topped the 24-stock Agriculture industry.

To access ICL’s Growth and Momentum ratings, click here.

Kronos Worldwide, Inc. (KRO)

KRO produces and markets value-added titanium dioxide pigments (TiO2). These pigments are used in paints, coatings, plastics, paper, fibers, and specialty products like inks, cosmetics, and foods.

KRO’s trailing-12-month net income margin of 5.05% is 4.1% higher than the industry average of 4.85%. Its trailing-12-month ROCE of 11.20% is 94.6% higher than the sector average of 5.75%. Likewise, the stock’s asset turnover ratio of 1.02x is 55.6% higher than the industry average of 0.66x.

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.

The consensus revenue and EPS estimates of $536.15 million and $0.15 for the fiscal 2025 first quarter (ending March 2025) exhibit a year-over-year rise of 12% and 115%, respectively.

Shares of KRO have surged 1.8% over the past five days to close the last trading session at $9.14.

KRO’s POWR Ratings reflect its robust prospects. The stock has an overall rating of B, equating to a Buy in our proprietary rating system.

KRO has an A grade for Growth and a B for Value and Sentiment. Within the B-rated Chemicals industry, KRO is ranked #9 out of 81 stocks.

Click here to access KRO’s ratings for Momentum, Stability, and Quality.

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TS shares fell $0.03 (-0.08%) in premarket trading Wednesday. Year-to-date, TS has gained 3.81%, versus a -0.66% rise in the benchmark S&P 500 index during the same period.

About the Author: Aritra_Gangopadhyay

Aritra is a financial journalist dedicated to breaking down complex financial topics into simple, actionable insights. Holding a Master’s degree in Economics, he uses his analytical expertise to help investors uncover unique opportunities for long-term success. More...

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