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Why You Should Add Huntsman (HUN) Stock to Your Portfolio

Huntsman Corporation’s HUN stock looks promising at the moment. The chemical maker benefits from its investment in downstream businesses and differentiated product innovation as well as strategic acquisitions.

We are positive on the company’s prospects and believe that the time is right for you to add the stock to the portfolio as it is poised to carry the momentum ahead.

Let's see what makes this Zacks Rank #2 (Buy) stock an attractive investment option at the moment.

Price Performance

Shares of Huntsman have rallied 32.2% over the past three months against the 9.7% growth of its industry. It has also outperformed the S&P 500’s 8.9% rise over the same period.

 

 

Estimates Northbound

Earnings estimate revisions have the greatest impact on stock prices. Over the past month, the Zacks Consensus Estimate for Huntsman for the current year has increased around 45.2%. The consensus estimate for 2021 has also been revised 9.7% upward over the same time frame.

Positive Earnings Surprise History

Huntsman has outpaced the Zacks Consensus Estimate in three of the trailing four quarters. In this time frame, it has delivered an earnings surprise of 21%, on average.

Growth Drivers in Place

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 company’s Polyurethanes segment, which accounted for more than half of its revenues last year, is well positioned for strong upside in the long term on the back of its 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 synergies of strategic acquisitions. The buyout of Demilec, a leading manufacturer and distributor of spray polyurethane foam ("SPF") insulation systems in North America, is expected to offer significant synergies.

Moreover, the acquisition of Icynene-Lapolla, a leading North American manufacturer and distributor of SPF, is in line with Huntsman’s strategy of expanding its downstream polyurethanes business. The combination of Icynene-Lapolla with Demilec is expected to create the world's leading supplier of spray foam products.

The company, in May 2020, also completed the acquisition of CVC Thermoset Specialties, a North American specialty chemical producer that serves industrial composites, adhesives and coatings markets. The buyout is in sync with the company’s strategy of expanding its specialty Advanced Materials portfolio.

Per Huntsman, the integration of CVC Thermoset Specialties and Icynene-Lapolla buyouts is ahead of plans and the company expects to achieve total annualized targeted synergies of $35 million for these acquisitions by the end of 2021.

Moreover, the company last month announced updates on its third-quarter 2020 guidance. It expects adjusted EBITDA in the Polyurethanes segment to be at least 40% better compared with previous guidance provided during second-quarter earnings call.

Huntsman noted that the improved outlook reflects continued strength in construction related markets as well as better-than-expected improvement in automotive demand and higher overall margins.

Stocks to Consider

Other top-ranked stocks worth considering in the basic materials space include Agnico Eagle Mines Limited AEM, Yamana Gold Inc. AUY and Eldorado Gold Corporation EGO.

Agnico Eagle has a projected earnings growth rate of 91.8% for the current year. The company’s shares have rallied around 50% in a year. It currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Yamana Gold has an expected earnings growth rate of 84.6% for the current year. The company’s shares have surged around 75% in the past year. It currently carries a Zacks Rank #2.

Eldorado Gold has a projected earnings growth rate of 2,325% for the current year. The company’s shares have gained roughly 43% in a year. It currently carries a Zacks Rank #2.

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Huntsman Corporation (HUN): Free Stock Analysis Report
 
Agnico Eagle Mines Limited (AEM): Free Stock Analysis Report
 
Yamana Gold Inc. (AUY): Free Stock Analysis Report
 
Eldorado Gold Corporation (EGO): Free Stock Analysis Report
 
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