Cabot Corporation’s ( CBT Quick Quote CBT - Free Report) stock looks promising at the moment. The company’s shares have popped around 18% over the past six months. We are positive on the company’s prospects and believe that the time is right for you to add the stock to portfolio as it looks promising and is poised to carry the momentum ahead. Let’s take a look into the factors that make this specialty chemicals and performance materials company an attractive choice for investors right now. What Makes CBT an Attractive Pick? Solid Rank & VGM Score
Cabot has a Zacks Rank #1 (Strong Buy) and a
VGM Score of B. Our research shows that stocks with a VGM Score of A or B, combined with a Zacks Rank #1 or 2 (Buy), offer the best investment opportunities for investors. Estimates Moving Up
Earnings estimate revisions have the greatest impact on stock prices. Over the past two months, the Zacks Consensus Estimate for Cabot for the current fiscal year has increased around 21.9%. The consensus estimate for the next fiscal has also been revised 15% upward over the same time frame.
Healthy Growth Prospects
The Zacks Consensus Estimate for earnings for the current fiscal for Cabot is currently pegged at $3.36, reflecting an expected year-over-year growth of 61.5%. Moreover, earnings are expected to register a 13.4% growth in the next fiscal year.
Superior Return on Equity (ROE)
ROE is a measure of a company’s efficiency in utilizing shareholder’s funds. ROE for the trailing 12-months for Cabot is 11.7%, above the industry’s level of 9%.
Valuation looks attractive as Cabot’s shares are currently trading at a level that is lower than the industry average, suggesting that the stock still has upside potential.
Going by the EV/EBITDA (Enterprise Value/ Earnings before Interest, Tax, Depreciation and Amortization) multiple, which is often used to value chemical stocks, Cabot is currently trading at trailing 12-month EV/EBITDA multiple of 6.67, cheaper compared with the industry average of 9.92. Upbeat Prospects
Cabot should gain from a recovery in demand from its automotive and tire customers from the pandemic-led slowdown. Moreover, improved pricing in its fumed metal oxides business is expected to support margins in the first quarter of fiscal 2021.
The company expects its Reinforcement Materials unit to benefit from improved margins, especially in Asia. It also expects the Performance Chemicals segment to gain in both volumes and product mix from a strengthening automotive market. Cabot should also benefit from the acquisition of Shenzhen Sanshun Nano New Materials. The acquisition significantly bolsters the market position and formulation capabilities of Cabot in the high-growth batteries market, especially in China. The buyout is also expected to create opportunities to expand Cabot’s position in the rapidly growing energy storage market.
Stocks to Consider
Other top-ranked stocks worth considering in the basic materials space include
Fortescue Metals Group Limited ( FSUGY Quick Quote FSUGY - Free Report) , Impala Platinum Holdings Limited ( IMPUY Quick Quote IMPUY - Free Report) and BHP Group ( BHP Quick Quote BHP - Free Report) . Fortescue has a projected earnings growth rate of 53.6% for the current fiscal. The company’s shares have surged around 153% in a year. It currently sports a Zacks Rank #1. 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 43% 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 24% in a year. It currently carries a Zacks Rank #1. 5 Stocks Set to Double
Each was hand-picked by a Zacks expert as the #1 favorite stock to gain +100% or more in 2020. Each comes from a different sector and has unique qualities and catalysts that could fuel exceptional growth.
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