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3 Basic Materials Stocks Crushing the S&P 500 in 2022
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Today, the market resumed its downward trajectory after yesterday’s small rally gave investors hope that a bottom had finally been put in. This whipsaw price action is rather cruel, as market participants are nearing complete exhaustion following one of the most brutal quarters in recent times.
Simply put, we all can’t wait to put these last several months behind us.
Believe it or not, there have still been several sectors throughout 2022 that have positive returns amid all of the carnage. One such sector is the Zacks Basic Materials Sector, which is currently +3.2% year-to-date compared to the S&P 500’s performance of -17%.
The chart below illustrates the year-to-date performance of the sector while comparing the S&P 500 as well.
Image Source: Zacks Investment Research
As we can see, price action has been much more favorable within the Zacks Basic Materials Sector. Three stocks – Nucor Corporation (NUE - Free Report) , Kronos Worldwide (KRO - Free Report) , and Nutrien (NTR - Free Report) – all reside within the sector.
Additionally, all three stocks currently carry the highly-coveted Zacks Rank #1 (Strong Buy). Let’s get into why I believe these stocks would be great portfolio additions amid a brutal trading environment.
Nucor Corporation
Nucor (NUE - Free Report) is a leading producer of structural steel, steel bars, steel joists, steel deck, and cold-finished bars in the United States.
Year-to-date, Nucor shares have been robust, penciling in nearly a 9% return for investors and easily outpacing the general market. Investors have defended this stock throughout 2022, and bears have not been able to bring it down amid the sellers’ market we’ve witnessed throughout the year.
Image Source: Zacks Investment Research
Additionally, valuation metrics are more than reasonable. Nucor’s forward earnings multiple sits at 4.6X, a fraction of its 27.7X high in 2020, and nowhere close to the median of 10.8X over the last five years. Furthermore, the value represents a 74% discount relative to the S&P 500’s forward P/E of 17.7X.
Image Source: Zacks Investment Research
Bottom-line growth rates are looking robust as well. The Consensus Estimate Trend has soared 28% to $8.00 per share for the upcoming quarter, reflecting a 60% growth in earnings from the year-ago quarter.
For the current fiscal year, the $27.18 per share estimate displays a sizable 17% jump in earnings year-over-year.
Image Source: Zacks Investment Research
Kronos Worldwide
Kronos Worldwide (KRO - Free Report) is a leading producer and marketer of TiO2, a white pigment used in coatings, plastics, papers, inks, food, and cosmetics.
Throughout 2022, KRO shares have been powerful, providing investors with nearly a 25% return that easily outpaces the S&P 500’s performance. Shares have been on a strong uptrend throughout May, and the chart looks like shares have more room to run.
Image Source: Zacks Investment Research
Valuation metrics bode well for shares as well. The company’s current forward earnings multiple of 8.7X is nowhere near its 35.8X high in 2020 and is nearly half of its median of 14.5X over the last five years. Additionally, the current value represents a 51% discount relative to the S&P 500.
Image Source: Zacks Investment Research
Look out for the company’s upcoming quarterly earnings in August, as the $0.51 quarterly EPS estimate displays growth in earnings in the triple-digits at 131% when compared to the year-ago quarter.
Furthermore, for the current fiscal year, the Consensus Estimate Trend has skyrocketed 61% to $2.06 per share over the last 60 days – reflecting another triple-digit growth in earnings of 110% year-over-year.
Image Source: Zacks Investment Research
Nutrien
Nutrien (NTR - Free Report) is a leading integrated provider of crop inputs and services that plays a vital role in helping farmers worldwide sustainably increase food production.
Year-to-date, Nutrien shares have been more than stellar, providing investors with a mighty return of nearly 33% and easily crushing the general market. The robust share performance bodes well for the company’s health; investors have thought highly of NTR shares throughout the market rout.
Image Source: Zacks Investment Research
Valuation metrics make NTR shares look like an absolute steal at current levels. NTR’s 6.3X forward earnings multiple is a fraction of its 36.8X high in 2018 and is nearly a fourth of its median of 20.1X over the last five years. Even with solid price appreciation throughout 2022, the metric still sits beautifully.
Image Source: Zacks Investment Research
Analysts have been positively revising their EPS estimates across the board over the last 60 days. For the upcoming quarter, the $5.54 per share estimate reflects triple-digit growth in earnings of 166% compared to the year-ago quarter.
Additionally, the $16.32 per share estimate for the current fiscal year represents another sizable triple-digit growth in earnings of 162% year-over-year.
Image Source: Zacks Investment Research
Bottom Line
As we can see, there are still winners in the market – investors have to do a little work to find them. Thankfully, we can find these winners swiftly and often by utilizing the Zacks Rank. All three companies carry the highly-coveted Zacks Rank #1 (Strong Buy), instilling a great deal of confidence for all three companies’ shares moving forward.
Share performance has been mighty strong, valuation metrics make shares look like steals, and all three companies display attractive bottom-line growth for the current fiscal year. These are all reasons why I believe that these stocks deserve a spot in any investor’s portfolio seeking exposure to the Basic Materials Sector.
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3 Basic Materials Stocks Crushing the S&P 500 in 2022
Today, the market resumed its downward trajectory after yesterday’s small rally gave investors hope that a bottom had finally been put in. This whipsaw price action is rather cruel, as market participants are nearing complete exhaustion following one of the most brutal quarters in recent times.
Simply put, we all can’t wait to put these last several months behind us.
Believe it or not, there have still been several sectors throughout 2022 that have positive returns amid all of the carnage. One such sector is the Zacks Basic Materials Sector, which is currently +3.2% year-to-date compared to the S&P 500’s performance of -17%.
The chart below illustrates the year-to-date performance of the sector while comparing the S&P 500 as well.
Image Source: Zacks Investment Research
As we can see, price action has been much more favorable within the Zacks Basic Materials Sector. Three stocks – Nucor Corporation (NUE - Free Report) , Kronos Worldwide (KRO - Free Report) , and Nutrien (NTR - Free Report) – all reside within the sector.
Additionally, all three stocks currently carry the highly-coveted Zacks Rank #1 (Strong Buy). Let’s get into why I believe these stocks would be great portfolio additions amid a brutal trading environment.
Nucor Corporation
Nucor (NUE - Free Report) is a leading producer of structural steel, steel bars, steel joists, steel deck, and cold-finished bars in the United States.
Year-to-date, Nucor shares have been robust, penciling in nearly a 9% return for investors and easily outpacing the general market. Investors have defended this stock throughout 2022, and bears have not been able to bring it down amid the sellers’ market we’ve witnessed throughout the year.
Image Source: Zacks Investment Research
Additionally, valuation metrics are more than reasonable. Nucor’s forward earnings multiple sits at 4.6X, a fraction of its 27.7X high in 2020, and nowhere close to the median of 10.8X over the last five years. Furthermore, the value represents a 74% discount relative to the S&P 500’s forward P/E of 17.7X.
Image Source: Zacks Investment Research
Bottom-line growth rates are looking robust as well. The Consensus Estimate Trend has soared 28% to $8.00 per share for the upcoming quarter, reflecting a 60% growth in earnings from the year-ago quarter.
For the current fiscal year, the $27.18 per share estimate displays a sizable 17% jump in earnings year-over-year.
Image Source: Zacks Investment Research
Kronos Worldwide
Kronos Worldwide (KRO - Free Report) is a leading producer and marketer of TiO2, a white pigment used in coatings, plastics, papers, inks, food, and cosmetics.
Throughout 2022, KRO shares have been powerful, providing investors with nearly a 25% return that easily outpaces the S&P 500’s performance. Shares have been on a strong uptrend throughout May, and the chart looks like shares have more room to run.
Image Source: Zacks Investment Research
Valuation metrics bode well for shares as well. The company’s current forward earnings multiple of 8.7X is nowhere near its 35.8X high in 2020 and is nearly half of its median of 14.5X over the last five years. Additionally, the current value represents a 51% discount relative to the S&P 500.
Image Source: Zacks Investment Research
Look out for the company’s upcoming quarterly earnings in August, as the $0.51 quarterly EPS estimate displays growth in earnings in the triple-digits at 131% when compared to the year-ago quarter.
Furthermore, for the current fiscal year, the Consensus Estimate Trend has skyrocketed 61% to $2.06 per share over the last 60 days – reflecting another triple-digit growth in earnings of 110% year-over-year.
Image Source: Zacks Investment Research
Nutrien
Nutrien (NTR - Free Report) is a leading integrated provider of crop inputs and services that plays a vital role in helping farmers worldwide sustainably increase food production.
Year-to-date, Nutrien shares have been more than stellar, providing investors with a mighty return of nearly 33% and easily crushing the general market. The robust share performance bodes well for the company’s health; investors have thought highly of NTR shares throughout the market rout.
Image Source: Zacks Investment Research
Valuation metrics make NTR shares look like an absolute steal at current levels. NTR’s 6.3X forward earnings multiple is a fraction of its 36.8X high in 2018 and is nearly a fourth of its median of 20.1X over the last five years. Even with solid price appreciation throughout 2022, the metric still sits beautifully.
Image Source: Zacks Investment Research
Analysts have been positively revising their EPS estimates across the board over the last 60 days. For the upcoming quarter, the $5.54 per share estimate reflects triple-digit growth in earnings of 166% compared to the year-ago quarter.
Additionally, the $16.32 per share estimate for the current fiscal year represents another sizable triple-digit growth in earnings of 162% year-over-year.
Image Source: Zacks Investment Research
Bottom Line
As we can see, there are still winners in the market – investors have to do a little work to find them. Thankfully, we can find these winners swiftly and often by utilizing the Zacks Rank. All three companies carry the highly-coveted Zacks Rank #1 (Strong Buy), instilling a great deal of confidence for all three companies’ shares moving forward.
Share performance has been mighty strong, valuation metrics make shares look like steals, and all three companies display attractive bottom-line growth for the current fiscal year. These are all reasons why I believe that these stocks deserve a spot in any investor’s portfolio seeking exposure to the Basic Materials Sector.