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Huntsman (HUN) Up 25% in 6 Months: What's Driving the Stock?

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Huntsman Corporation’s (HUN - Free Report) shares have popped 25.2% over the past six months. The rally has resulted in the stock outperforming its industry’s decline of 0.9% over the same time frame. The chemical maker has also topped the S&P 500’s 9.1% rise over the same period.

Let’s take a look into the factors that are driving this Zacks Rank #3 (Hold) stock.

 

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What’s Going in HUN’s Favor?

Huntsman is benefiting from its investment in downstream businesses and differentiated product innovation. It remains focused on growing its downstream specialty and formulation businesses and is shifting its MDI (methylene diphenyl diisocyanate) business from components to differentiated systems that typically have higher margins and lower volatility.

The company's Polyurethanes segment is well positioned for strong upside in the long term on the back of its focus on ramping up its high-value differentiated downstream portfolio. Substitution of MDI for less effective materials will remain a key driving factor for the MDI business.

Huntsman, in its third-quarter call, said that it is seeing strong pent-up demand across its businesses amid supply chain disruptions. The company is witnessing positive trends in its construction markets. It is investing in high-return organic projects that will boost its total returns and improve margins over the next 24 to 36 months.

Huntsman should also gain from significant synergies of acquisitions. Its strong liquidity and balance sheet leverage gives it adequate flexibility to continue to develop and expand its core businesses through acquisitions and internal investments.

The company expects to deliver around $135 million of annualized savings and acquisition integration synergies by mid-2023. It also remains on track with the integration of CVC Thermoset and Gabriel Performance Products acquisitions. Huntsman expects these acquisitions to deliver run-rate synergies of roughly $23 million by early 2023.

Earnings estimates for Huntsman have also been going up over the past two months. The Zacks Consensus Estimate for 2021 has increased around 11.4% while the same for fourth-quarter 2021 has gone up 16.7%. The favorable estimate revisions instill investor confidence in the stock.

Stocks to Consider

Better-ranked stocks worth considering in the basic materials space include Nutrien Ltd. (NTR - Free Report) , AdvanSix Inc. (ASIX - Free Report) and Intrepid Potash, Inc. (IPI - Free Report) , each sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
 
Nutrien has an expected earnings growth rate of 212.2% for the current year. The Zacks Consensus Estimate for NTR's current-year earnings has been revised 10.6% upward over the last 60 days.

Nutrien beat the Zacks Consensus Estimate for earnings in three of the last four quarters while missing once. It has a trailing four-quarter earnings surprise of roughly 73.5%, on average. NTR has rallied around 47% in a year.

AdvanSix has a projected earnings growth rate of 194.5% for the current year. ASIX's consensus estimate for the current year has been revised 5.9% upward over the last 60 days.

AdvanSix beat the Zacks Consensus Estimate for earnings in each of the trailing four quarters, the average being 46.9%. ASIX has rallied around 120% in a year.

Intrepid Potash has a projected earnings growth rate of 244.7% for the current year. The consensus estimate for IPI’s current year has been revised 3.3% upward over the last 60 days.

Intrepid Potash beat the Zacks Consensus Estimate for earnings in three of the last four quarters while missing once. It has a trailing four-quarter earnings surprise of roughly 132.9%, on average. IPI shares have surged around 154% in a year.


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