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What Makes Cabot (CBT) Stock a Solid Choice Right Now

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Cabot Corporation’s (CBT - Free Report) stock looks promising at the moment. The company’s shares have popped around 26% 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.

Cabot currently carries 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.

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?

An Outperformer

Shares of Cabot are up 54.3% over the past year against the 50.3% rise of its industry. It has also outperformed the S&P 500’s roughly 40.5% rise over the same period.

 

Zacks Investment ResearchImage Source: Zacks Investment Research

 

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 23.2%. The consensus estimate for third-quarter fiscal 2021 has also been revised 26.6% upward over the same time frame.

Solid Growth Prospects

The Zacks Consensus Estimate for earnings for the current fiscal for Cabot is currently pegged at $4.94, reflecting an expected year-over-year growth of 137.5%. Moreover, earnings are expected to register a whopping 1,800% growth in the fiscal third quarter.

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 19.2%, above the industry’s level of 11.4%.

Growth Drivers in Place

Cabot should gain from a recovery in demand from its automotive and tire customers from the pandemic-led slowdown, its disciplined execution of operations and targeted growth initiatives. The company saw strong volumes in the tire and automotive markets in the fiscal second quarter on the back of continued global recovery. Passenger car miles driven and automotive builds have improved while strong truck miles driven is driving the replacement tire market. The company is also benefiting from strength in infrastructure, packaging and consumer-driven applications.

Cabot, in its fiscal second-quarter call, stated that it expects continued demand strength across all its segments in the second half of the fiscal. The company envisions volumes to remain strong through the second half.

The company 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.

 

Cabot Corporation Price and Consensus

 

Cabot Corporation Price and Consensus

Cabot Corporation price-consensus-chart | Cabot Corporation Quote

 

Stocks to Consider

Other top-ranked stocks worth considering in the basic materials space include Nucor Corporation (NUE - Free Report) , ArcelorMittal (MT - Free Report) and Univar Solutions Inc. (UNVR - Free Report) .

Nucor has a projected earnings growth rate of 344.9% for the current year. The company’s shares have surged around 134% in a year. It currently sports a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.

ArcelorMittal has an expected earnings growth rate of 1,163.6% for the current year. The company’s shares have surged around 195% in the past year. It currently carries a Zacks Rank #1.

Univar has an expected earnings growth rate of around 35.2% for the current year. The company’s shares have rallied 47% in the past year. It currently carries a Zacks Rank #1.

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ArcelorMittal (MT) - free report >>

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Cabot Corporation (CBT) - free report >>

Univar Solutions Inc. (UNVR) - free report >>