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Why You Should Add Quaker Chemical (KWR) to Your Portfolio

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Quaker Chemical Corporation’s (KWR - Free Report) shares have popped 37% over the past three months. We are positive on the company’s prospects and believe that the time is right for you to add the stock to your portfolio as it looks promising and is poised to carry the momentum ahead.

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

An Outperformer

Shares of Quaker Chemical have shot up 52.8% over a year compared with 6.4% rise of its industry. It has also outperformed the S&P 500’s 15.7% rise over the same period.

 

 

Estimates Moving Up

Over the past two months, the Zacks Consensus Estimate for Quaker Chemical for 2020 has increased around 20.8%. The consensus estimate for 2021 has also been revised 3.9% upward over the same time frame. The favorable estimate revisions instill investor confidence in the stock.

Positive Earnings Surprise History

Quaker Chemical has outpaced the Zacks Consensus Estimate in each of the trailing four quarters. In this time frame, it has delivered an earnings surprise of 50.3%, on average.

Upbeat Prospects

Quaker Chemical benefited from a strong recovery in its business on a sequential comparison basis in the third quarter of 2020 on an improvement in its end-use markets. The company, in its third-quarter call, said that it expects gradual sequential improvement in its end markets as it progresses through the next two years.  It now expects full-year 2020 adjusted EBITDA to be more than $215 million.  

The company is expected to gain from cost savings actions, cost synergies, improvement in product margins and healthy cash flows amid the challenging environment. It now expects to achieve $58 million of cost synergies for 2020, up from its prior view of $53 million. Quaker Chemical has also raised its estimate for total synergies for 2021 to $75 million from its earlier view of $65 million.  

The company’s combination with Houghton International, Inc and the acquisition of the operating divisions of Norman Hay plc are also expected to drive its top line and margins.

Other Stocks to Consider

Some top-ranked stocks in the basic materials space include Bunge Limited (BG - Free Report) , Impala Platinum Holdings Limited (IMPUY - Free Report) and BHP Group (BHP - Free Report) .

Bunge has an expected earnings growth rate of 43.5% for the current year. The company’s shares have gained around 13% in the past year. It currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Impala Platinum has an expected earnings growth rate of 131.7% for the current fiscal. The company’s shares have rallied around 34% in the past year. It currently carries a Zacks Rank #1.

BHP Group has a projected earnings growth rate of 43.3% for the current fiscal year. The company’s shares have gained around 21% in a year. It currently carries a Zacks Rank #1.

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