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The materials sector includes companies engaged in the discovery, development, and processing of raw materials, which are used across many sectors and industries. Materials stocks include manufacturers of products as varied as plastic, fertilizer, paper, concrete, and metals. Some prominent names include DuPont de Nemours Inc. (DD), PPG Industries Inc. (PPG), and Ball Corp. (BLL). Materials stocks, as represented by the Materials Select Sector SPDR ETF (XLB), have underperformed the broader market with a total return of -18.3% compared to the S&P 500’s total return of -10.2% over the past 12 months. These market performance numbers and the statistics in the tables below are as of March 25.
Here are the top 3 materials stocks with the best value, the fastest earnings growth, and the most momentum.
Best Value Materials Stocks
These are the materials stocks with the lowest 12-month trailing price-to-earnings (P/E) ratio. Because profits can be returned to shareholders in the form of dividends and buybacks, a low P/E ratio shows you’re paying less for each dollar of profit generated.
- LyondellBasell Industries NV: LyondellBasell is a chemical company based in the Netherlands that refines and produces plastic resins and other chemicals. These are used in the manufacturing of lightweight plastics, construction materials, automotive components, durable textiles, and biofuels.
- Eastman Chemical Co.: Eastman Chemical produces industrial chemicals, fibers, plastics, and additives used by a wide range of industries. The company announced in December that Executive Vice President and Chief Financial Officer (CFO) Curtis E. Espeland would be retiring. Vice President, Finance William T. McLain was named Espeland’s successor.
- Nucor Corp.: Nucor is a manufacturer of steel and steel products, including carbon and alloy steel, steel joints, steel deck, and metal building systems.
Fastest Growing Materials Stocks
These are the materials stocks with the highest year-over-year (YOY) earnings per share (EPS) growth for the most recent quarter. Rising earnings show that a company’s business is growing and is generating more money that it can reinvest or return to shareholders.
- Newmont Corp.: Newmont acquires and develops mineral properties. The company produces primarily gold, but also silver, copper, zinc, and lead. The company recently announced that it was temporarily halting production at four mines in order to protect nearby communities and to align with travel restrictions resulting from the spread of COVID-19. The company also withdrew its full-year 2020 guidance.
- International Flavors & Fragrances Inc.: International Flavors & Fragrances creates and manufactures fragrance and flavor chemical formulations for personal care, food, beverage, and other industries. The company announced in December that Rustom Jilla was appointed CFO, effective January 20, 2020.
- Sherwin-Williams Co.: Sherwin-Williams develops, manufactures, and distributes paint, coatings, and related products. The company sells its products to professional, industrial, commercial, and retail customers. Sherwin-Williams reported full-year net income growth of 39.0% on net sales growth of 2.1% for 2019.
Materials Stocks with the Most Momentum
These are the materials stocks that had the highest total return over the last 12 months.
|Materials Stocks with the Most Momentum|
|Price ($)||Market Cap ($B)||12-Month Trailing Total Return (%)|
|Newmont Corp. (NEM)||47.50||38.4||43.2|
|Sherwin-Williams Co. (SHW)||454.02||41.7||8.9|
|Air Products & Chemicals Inc. (APD)||194.42||42.9||6.6|
|S&P 500 (SPY)||N/A||N/A||-10.2|
|Materials Select Sector SPDR ETF (XLB)||N/A||N/A||-18.3|
- Newmont Corp.: See above for company description.
- Sherwin-Williams Co.: See above for company description.
- Air Products & Chemicals Inc.: Air Products & Chemicals is a company engaged in the manufacture and distribution of atmospheric and specialty gases, as well as related products. The company sells oxygen, nitrogen, argon, helium, polyurethane, epoxy curatives, and resins.