The materials sector includes companies engaged in the discovery, development and processing of raw materials, which are used in a wide variety of sectors and industries. Material inventories include manufacturers of products as varied as plastic, fertilizer, paper, concrete and metals. Prominent names include Ecolab Inc. (ECL), Air Products and Chemicals Inc. (APD) and DuPont de Nemours Inc. (DD).
Materials stocks, represented by the Materials Select Sector SPDR ETF (XLB), have nearly matched the performance of the broader market. The XLB’s total return was 38.7% over the past 12 months, slightly ahead of the Russell 1000’s total return of 38.6%. These market performance figures and all statistics in the tables below are as of July 15, 2021.
Here are the top 3 material stocks with the best value, fastest growth and most momentum.
These are the material stocks with the lowest price-earnings ratio over 12 months. Because profits can be returned to shareholders in the form of dividends and buybacks, a low P/E ratio shows that you are paying less for every dollar of profit generated.
|Best Value Materials Stocks|
|Price ($)||Market Capitalization ($B)||12 month ongoing P/E ratio|
|Celanese Corp. ( WHAT THE)||155.96||17.6||8.7|
|The Mosaic Co. (MOSS)||30.53||11.6||11.4|
|NewMarket Corp. ( NEW)||307.60||3.4||13.2|
- Celanese Corp.: Celanese is a global producer of chemicals and advanced materials. It produces acetyl, acetate, vinyl emulsion and engineered polymers. On July 14, Celanese announced a cash dividend of $0.68 per share, payable on August 9 to shareholders holding a record on July 26, 2021.
- The Mosaic Co.: The Mosaic Co. is a producer and distributor of food products for crops. The company supplies feed ingredients, concentrated phosphates, potassium and related products to the agricultural industry worldwide.
- NewMarket Corp.: NewMarket develops, produces and blends fuel and lubricant additives. The company supplies its products to refineries and other companies that sell petroleum products. The products are used in transportation and industrial equipment.
These are the top materials stocks, ranked by a growth model that rates companies based on a 50/50 weighting of their most recent quarter-over-year (YOY) percentage revenue growth and their most recent quarterly YOY earnings per share (EPS) growth. Both sales and profits are critical factors for a company’s success. Therefore, ranking companies by only one growth metric makes a ranking susceptible to that quarter’s accounting anomalies (such as changes in tax laws or restructuring costs) that may prevent one figure or the other from being representative of the company in general. Companies with quarterly earnings per share or revenue growth of more than 2500% were excluded as outliers.
|Fastest Growing Material Stocks|
|Price ($)||Market Capitalization ($B)||EPS growth (%)||Revenue growth (%)|
|Element Solutions Inc. (ESI)||23.61||5.8||1,000||21.5|
|Southern Copper Corp. (SCCO)||63.96||49.5||253.6||47.3|
|LyondellBasell Industries NV (LYB)||101.00||33.8||657.1||21.2|
- Element Solutions Inc.: Element Solutions is a globally operating specialty chemicals company. It makes and supplies chemical products used in consumer electronics, communications infrastructure, automobiles, industrial surface finishing, consumer packaging, offshore oil production and drilling, and more. In June, Element Solutions announced the planned acquisition of Coventya Holding SAS, a surface finishing chemical company. Under the agreement, Element will pay approximately €420 million ($495.7 million) in cash. The transaction is expected to close at the end of 2021.
- Southern Copper Corp.: Southern Copper researches, develops and produces copper. In the process, the company also produces various by-products, including molybdenum, silver, zinc, sulfuric acid and other metals. It conducts mining activities in Peru and Mexico.
- LyondellBasell Industries NV: LyondellBasell Industries makes petrochemicals that are used in a wide variety of industries, including the manufacture of personal care products, lightweight plastics, food packaging, auto parts, medical applications, biofuels and more. In June, LyondellBasell announced it had acquired Malaysia-based PolyPacific Polymers Sdn. bhd. The company produces reinforced and modified polyolefin compounds. The company will undergo a rebranding and name change, with employees becoming LyondellBasell employees. The terms of the deal have not been disclosed. The value of the transaction was not disclosed in the press release.
These are the material inventories with the highest total return over the past 12 months.
|Material stocks with the most momentum|
|Price ($)||Market Capitalization ($B)||12 months sequential total return (%)|
|Cleveland Cliffs Inc. (CLF)||21.62||10.8||259.1|
|Olin Corp. (OLN)||42.90||6.8||254.3|
|United States Steel Corp. (X)||23.20||6.3||189.2|
|Materials Select Sector SPDR ETF (XLB)||N/A||N/A||38.7|
- Cleveland Cliffs Inc.: Cleveland-Cliffs is a major North American producer of flat-rolled steel and a major supplier of iron ore pellets.
- Olin Corp.: Olin manufactures and distributes chemical products such as chlorine and caustic soda, vinyls, epoxies, chlorinated organics, bleach and hydrochloric acid. It also makes sporting ammunition and small caliber military ammunition. On July 1, the company announced that it had entered into an agreement with chemical manufacturer ASHTA Chemicals Inc. for the purchase and sale of the chlorine produced at ASHTA’s facility in Ashtabula, Ohio. The deal is expected to optimize logistics and reduce costs for both companies.
- United States Steel Corp.: United States Steel is an integrated steel producer that makes a variety of steel products at plants in North America and Europe. The company serves customers in the automotive, container, industrial, construction, oil and gas and appliance industries. The company released guidance for the second quarter of 2021 on June 17, which includes projected adjusted EBITDA of $1.2 billion, which is more than double that of the first quarter of 2021. The higher expectations were driven by factors such as high prices and strong demand.
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