2 Under-the-Radar Chemical Stocks to Buy Now

NYSE: VHI | Valhi, Inc.  News, Ratings, and Charts

VHI – With the gradual restoration of global manufacturing operations, demand for chemicals is soaring. Given rising costs and an increasing reliance on domestic chemical manufacturing, we believe it may be prudent to scoop up quality under-the-radar chemical stocks Valhi (VHI) and American Vanguard (AVD). Read on…

The chemical industry is a major part of the U.S. manufacturing sector, supplying vast domestic and international markets. Despite worries about carbon emissions, supply chain challenges, and high input costs, the chemical industry’s rebound has been driven primarily by robust demand for commodity and specialty chemicals.

Chemical demand is estimated to rise due to increased use in high-end markets such as automotive and construction. Furthermore, rapid organizational transformation through modern technologies is anticipated to promote the growth of the chemical sector in the coming years. Consequently, the global chemical market is expected to reach $6371.09 billion by 2026, registering a CAGR of 8.4%.

Given this backdrop, we think it could be wise to buy the stock of fundamentally sound chemical companies Valhi Inc. (VHI) and American Vanguard Corporation (AVD), which are yet to attract significant investor attention.

Valhi Inc. (VHI)

VHI operates in the chemicals, component products, and real estate management and development industries in Asia Pacific, Europe, North America, and globally. The firm operates via its subsidiaries, which include NL Industries, Inc., Kronos Worldwide, Inc. (Kronos), CompX International, Inc. (CompX), Tremont LLC, Basic Management, Inc. (BMI), and the LandWell Company (LandWell).

VHI’s total net sales increased 23.6% from the year-ago value to $629 million for the first quarter ended March 31, 2022. Its operating income grew 96.3% year-over-year to $100.7 million. The company’s net income surged 213.1% from the prior-year quarter to $45.4 million, while its EPS rose 205.8% year-over-year to $1.59.

Analysts expect the EPS to increase 114.6% year-over-year to $9.57 in fiscal 2022. The consensus revenue estimate of $2.66 billion in fiscal 2022 represents a 15.9% increase from the same period last year. The stock has gained 77.9% over the past six months and 68.8% year-to-date.

VHI’s POWR Ratings reflect this promising outlook. The company has an overall rating of A, which translates to Strong Buy in our proprietary rating system. The POWR Ratings assess stocks by 118 different factors, each with its own weighting.

VHI has also rated an A grade for Growth, Value, and Sentiment. Within the A-rated Chemicals industry, it is ranked #1 of 89 stocks. Click here to see additional POWR Ratings for Quality, Momentum, and Stability for VHI.

American Vanguard Corporation (AVD)

AVD develops, produces, and markets specialty chemicals for agricultural, commercial, and consumer purposes in the United States and globally through its subsidiaries. It sells its products through national distribution corporations, buying groups or co-operatives, sales offices, salesforce executives, sales agents, and wholly-owned distributors.

For the first quarter ended March 31, 2022, AVD’s net sales increased 28.7% from the year-ago value to $149.44 million. Its operating income grew 303.6% year-over-year to $14.75 million. The company’s net income surged 223.5% from the prior-year quarter to $9.94 million, while its EPS rose 230% year-over-year to $0.33.

AVD’s EPS is expected to grow 75% year-over-year to $1.12 in the current quarter. The consensus revenue estimate of $625.85 million in fiscal 2022 represents a 12.4% increase from the same period last year. The stock has gained 32.9% over the past year and 40.6% over the past six months.

It is no surprise that AVD has an overall A rating, which equates to Strong Buy in our POWR Ratings system. The stock also has an A grade for Sentiment and a B for Growth and Quality. In the Chemicals industry, it is ranked #4.

Beyond the POWR Rating grades I have just highlighted, you can view AVD ratings for Momentum, Stability, and Value.


VHI shares were unchanged in premarket trading Thursday. Year-to-date, VHI has gained 69.61%, versus a -16.27% rise in the benchmark S&P 500 index during the same period.


About the Author: Pragya Pandey


Pragya is an equity research analyst and financial journalist with a passion for investing. In college she majored in finance and is currently pursuing the CFA program and is a Level II candidate. More...


More Resources for the Stocks in this Article

TickerPOWR RatingIndustry RankRank in Industry
VHIGet RatingGet RatingGet Rating
AVDGet RatingGet RatingGet Rating

Most Popular Stories on StockNews.com


:  |  News, Ratings, and Charts

Is the Bear Market Over???

The S&P 500 (SPY) quickly dispensed with 2 key levels of resistance on Wednesday following statements by Fed Chairman Powell. Now more people are contemplating that the 2022 bear market may be over and time to get more bullish. 40 year investment veteran Steve Reitmeister weighs in on this timely topic in his new commentary. Spoiler Alert: he is not impressed and still believes that the bears have the upper hand. Read on below for the full story...

:  |  News, Ratings, and Charts

5 Stocks With Juicy Dividends to Buy Now

A possible recession caused by the Fed’s continued interest rate hikes is expected to weigh on investor sentiment and keep the market volatile in the upcoming months. Therefore, investors looking to limit risks and add stability to their portfolios could buy Sysco (SYY), Hillenbrand (HI), Ennis (EBF), Sisecam Resources (SIRE), and Genie Energy (GNE), as they have a history of consistent dividend payments. Read on…

:  |  News, Ratings, and Charts

3 Stocks That Can Help Ease Your Recession Fears

Major macroeconomic headwinds have heightened recessionary fears in the economy. Moreover, the Fed will likely keep raising rates next year as well. Amid fears of a downturn, fundamentally strong stocks PepsiCo (PEP), Humana (HUM), and Weis Markets (WMK) might be ideal investments based on their stable and consistent dividend history. Read on...

:  |  News, Ratings, and Charts

1 Energy Stock to Stay Bullish on in 2023

Despite widespread market uncertainties, energy company Marathon Petroleum (MPC) recently increased its dividend payouts by almost 30%. It has gained more than 90% in 2022, and Wall Street analysts expect it to rally further shortly. Therefore, investors might consider staying bullish on MPC in 2023. Keep reading…

:  |  News, Ratings, and Charts

3 Stocks That Can Help Ease Your Recession Fears

Major macroeconomic headwinds have heightened recessionary fears in the economy. Moreover, the Fed will likely keep raising rates next year as well. Amid fears of a downturn, fundamentally strong stocks PepsiCo (PEP), Humana (HUM), and Weis Markets (WMK) might be ideal investments based on their stable and consistent dividend history. Read on...

Read More Stories

More Valhi, Inc. (VHI) News View All

Event/Date Symbol News Detail Start Price End Price Change POWR Rating
Loading, please wait...
View All VHI News