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Why You Should Add Element Solutions (ESI) to Your Portfolio

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Element Solutions Inc. (ESI - Free Report) stock looks promising at the moment. The company is benefiting from acquisitions, cost reductions and strong demand.

We are positive on the company’s prospects and believe that the time is right for to add the stock to the portfolio as it is poised to carry the momentum ahead.

Let’s take a look at the factors that make this Zacks Rank #2 (Buy) stock an attractive choice for investors right now.

An Outperformer

Shares of Element have soared 114.2% over the past year compared with the 21.3% rise for the industry. It has also outperformed the S&P 500’s 30.6% growth over the same period.

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Upward Estimate Revisions

Over the past three months, the Zacks Consensus Estimate for the current year has increased 1.5%. The consensus mark for 2022 has also been revised 2.7% upward over the same time frame. The favorable estimate revisions instill investor confidence in the stock.

Impressive Earnings Surprise History

Element outpaced the Zacks Consensus Estimate in three of the trailing four quarters, the earnings surprise being 7.1%, on average.

Upbeat Prospects

Element Solutions is benefiting from strategic acquisitions, cost management measures and strong demand in its end markets. It is seeing continued strength in its high-end electronics business.

The company stands to benefit from strategic acquisitions. The recent acquisition of H.K. Wentworth is expected to boost growth in its electronics portfolio. The recently announced buyout of Coventya will expand its offerings across industrial surface treatment markets and offer significant synergies. The Kester acquisition has added capabilities and scale to its existing electronics assembly materials business. Moreover, the DMP buyout has expanded Element Solutions’ investment in technology to offer innovative solutions. The cash proceeds from the divestment of its Agricultural Solution Unit enable the company to invest in strategic markets and pursue mergers and acquisitions.

Element has been following various reorganization and cost management measures that have contributed to cost savings and profits. Continued cost discipline and other strategic actions are expected to support margins and act as tailwinds for 2021.

The company believes in strategic usage of cash and remains committed to boosting shareholders' returns. It generated $72 million of free cash flow in the second quarter of 2021. It expects to generate free cash flow of roughly $285 million for full-year 2021. The company continues to look for opportunities to deploy excess capital.

Other Stocks to Consider

Some other top-ranked stocks in the basic materials space are BASF SE (BASFY - Free Report) , Aperam S.A. (APEMY - Free Report) and Avient Corporation (AVNT - Free Report) , each sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

BASF has a projected earnings growth rate of 96.7% for the current year. The company’s shares have rallied 26.7% over a year.

Aperam has a projected earnings growth rate of 429.8% for the current year. The company’s shares have surged 104.1% over a year.

Avient has a projected earnings growth rate of 75.2% for the current year. The company’s shares have climbed 94.2% over a year.


In-Depth Zacks Research for the Tickers Above


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Element Solutions Inc. (ESI) - free report >>

BASF SE (BASFY) - free report >>

Aperam (APEMY) - free report >>

Avient Corporation (AVNT) - free report >>