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Ingevity (NGVT) Up 44% in 6 Months: What's Behind the Rally?

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Shares of Ingevity Corporation (NGVT - Free Report) have popped 44.2% over the past six months. The company has also outpaced its industry’s rise of roughly 24.2% over the same time frame.

Ingevity, a Zacks Rank #3 (Hold) stock, has a market cap of roughly $2.4 billion and average volume of shares traded in the last three months was around 262.9K.


 

Let’s take a look into the factors that are driving this specialty chemicals and materials maker.

What's Aiding NGVT?

Ingevity is gaining from growth in its applications driven by regulations and technology adoption, its cost-management actions and the acquisition of the Capa caprolactone business.

The company is benefiting from higher sales in China as automakers in the country have essentially completed the implementation of the China 6 standard. It saw higher demand for its automotive activated carbon products in China in the second quarter of 2020 on the back of the China 6 implementation. The momentum is likely to have continued in the third quarter.

Moreover, Ingevity is seeing healthy growth in pavement technologies on strength in North America. It is seeing continued adoption of the Evotherm warm-mix technology.

The company is also taking certain cost-reduction measures in the wake of the coronavirus pandemic to boost profitability. These actions include reduction of headcount through an early retirement program, streamlining of manufacturing processes and reduction of traveling expenses and plant spending. Ingevity saw benefits of these initiatives in the second quarter. The company expects these actions to deliver $35 million of savings this year.

Ingevity is also benefiting from the acquisition of the Capa caprolactone business. Capa has a strong and market-leading business that focuses on high-growth end-use applications. The buyout enabled Ingevity with a new technology platform to drive revenue and earnings growth.

 

Stocks to Consider

Better-ranked stocks worth considering in the basic materials space include Agnico Eagle Mines Limited (AEM - Free Report) , Yamana Gold Inc. and Eldorado Gold Corporation (EGO - Free Report) .

Agnico Eagle has a projected earnings growth rate of 104.1% for the current year. The company’s shares have rallied around 57% 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 92.3% for the current year. The company’s shares have surged around 88% in the past year. It currently carries a Zacks Rank #2 (Buy).

Eldorado Gold has a projected earnings growth rate of 2,450% for the current year. The company’s shares have shot up roughly 69% in a year. It currently carries a Zacks Rank #2.

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