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LyondellBasell (LYB) Well Poised on Expansion Actions

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On Jan 3, we issued an updated research report on Netherlands-based chemical maker, LyondellBasell Industries (LYB - Free Report) .

LyondellBasell has outperformed the Zacks categorized Chemicals-Diversified industry in the last six months, supported by better-than-expected earnings in the last reported quarter and its expansion initiatives. The company's shares gained 17.8% during the period while the industry saw a gain of 14.1%.


LyondellBasell beat earnings as well as revenue expectations in the third quarter of 2016. The company saw significant contribution from its European olefins and polyolefins business in the third quarter as well as the first nine months of 2016.

LyondellBasell continues to benefit from the favorable North American natural gas environment. It should also gain from its ethylene and polyethylene expansion moves. The company is executing its expansion projects to leverage the U.S. natural gas liquids (NGLs) advantage.

The company has already completed an 800-million pound per year expansion at its La Porte site, a 250-million pounds per year expansion at its Channelview facility, and the addition of 800 million pounds of capacity at its Corpus Christi plant.

LyondellBasell is also advancing plans to build a world-scale plant on the U.S. Gulf Coast for producing propylene oxide (“PO”) and tertiary butyl alcohol (“TBA”), leveraging the shale gas boom in the region. The new PO/TBA facility, considered to be the largest of its kind, will be built in the Houston area.

The company has also decided to build a high density polyethylene (HDPE) plant on the U.S. Gulf Coast. The facility, which will have an annual capacity of 1.1 billion pounds (500,000 metric tons), will be the first commercial plant to employ the company’s new proprietary Hyperzone PE technology. LyondellBasell has chosen its La Porte manufacturing complex as the site for the HDPE Plant.

LyondellBasell also remains committed to deliver greater value to its shareholders leveraging healthy cash flows. The company returned roughly $1.2 billion to its shareholders in the form of dividends and share repurchases in the third quarter.

LyondellBasell currently carries a Zacks Rank #2 (Buy).

Other Stocks to Consider

Other well-placed companies in the chemical space include The Chemours Company (CC - Free Report) , Kronos Worldwide, Inc. (KRO - Free Report) and Methanex Corporation (MEOH - Free Report) all holding a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Chemours has an expected earnings growth of around 60.1% for the current year.

Kronos has an expected earnings growth of around 261.5% for the current year.

Methanex has an expected long-term growth of around 15%.

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