Yahoo Finance Here's Why You Should Retain Huntsman (HUN) in Your Portfolio
Huntsman Corporation HUN is expected to benefit from its investment in downstream businesses and differentiated product innovation as well as strategic acquisitions amid certain headwinds including higher raw material and logistical costs.
The company’s shares are up 23.8% over a year, compared with the 13% rise of its industry.
Image Source: Zacks Investment Research
Let’s find out why this Zacks Rank #3 (Hold) stock is worth retaining at the moment.
What’s Aiding HUN?
Huntsman remains focused on growing its downstream specialty and formulation businesses and is shifting its MDI (methylene diphenyl diisocyanate) business from components to differentiated systems that typically have higher margins and lower volatility.
The Polyurethanes segment is well positioned for strong upside in the long term on the back of the company’s focus on ramping up its high-value differentiated downstream portfolio. Substitution of MDI for less effective materials will remain a key driving factor for the MDI business.
Huntsman should also gain from significant synergies of acquisitions. Its strong liquidity and balance sheet leverage gives it adequate flexibility to continue to develop and expand its core businesses through acquisitions and internal investments.
The company expects to deliver around $135 million of annualized savings and acquisition integration synergies by mid-2023. It also remains on track with the integration of CVC Thermoset and Gabriel Performance Products acquisitions. Huntsman expects these acquisitions to deliver run-rate synergies of roughly $23 million by early 2023.
A Few Headwinds
The company faces headwind from a spike in raw materials and logistical costs as witnessed in the most recent quarter. Supply disruptions have led to a rise in raw material costs. The company expects unfavorable impacts from higher costs of raw materials and logistics challenges to continue in the fourth quarter of 2021. Raw material and logistics headwinds may impact margins in the fourth quarter.
Huntsman’s Advanced Materials unit is still exposed to softness in the aerospace markets. The pandemic is still impacting international travel. Despite a recovery of late, some weakness in aerospace is expected to continue in the near term.
Huntsman Corporation Price and Consensus
Huntsman Corporation price-consensus-chart | Huntsman Corporation Quote
Stocks to Consider
Better-ranked stocks worth considering in the basic materials space include Nutrien Ltd. NTR, AdvanSix Inc. ASIX and Intrepid Potash, Inc. IPI, each sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Nutrien has an expected earnings growth rate of 212.2% for the current year. The Zacks Consensus Estimate for NTR's current-year earnings has been revised 11.5% upward over the last 60 days.
Nutrien beat the Zacks Consensus Estimate for earnings in three of the last four quarters while missing once. It has a trailing four-quarter earnings surprise of roughly 73.5%, on average. NTR has rallied around 35% in a year.
AdvanSix has a projected earnings growth rate of 196.9% for the current year. ASIX's consensus estimate for the current year has been revised 6.8% upward over the last 60 days.
AdvanSix beat the Zacks Consensus Estimate for earnings in each of the trailing four quarters, the average being 46.9%. ASIX has rallied around 140% in a year.
Intrepid Potash has a projected earnings growth rate of 244.7% for the current year. The consensus estimate for IPI’s current year has been revised 3.3% upward over the last 60 days.
Intrepid Potash beat the Zacks Consensus Estimate for earnings in three of the last four quarters while missing once. It has a trailing four-quarter earnings surprise of roughly 132.9%, on average. IPI shares have surged around 189% in a year.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
Huntsman Corporation (HUN) : Free Stock Analysis Report
Intrepid Potash, Inc (IPI) : Free Stock Analysis Report
AdvanSix (ASIX) : Free Stock Analysis Report
Nutrien Ltd. (NTR) : Free Stock Analysis Report
To read this article on Zacks.com click here.
Zacks Investment Research
