FMC Corporation’s (FMC - Free Report) stock looks promising at the moment. The chemical company has seen its shares shoot up roughly 63% year to date. If you haven’t taken advantage of the share price appreciation yet, 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 delve deeper into the factors that make this Zacks Rank #2 (Buy) stock an attractive investment option.
What Makes FMC an Attractive Pick?
An Outperformer: FMC Corp. has significantly outperformed the industry it belongs to over a year. Its shares rallied 61.4% over this period compared with the industry’s gain of 20.9% over the same period. FMC Corp. is benefiting from its strategic investments, acquisitions and efforts to expand its market position and strengthen its portfolio. Upbeat prospects for the company’s Lithium unit have also provided a boost to its shares.
Estimates Northbound: Annual estimates for FMC Corp. have moved north over the past two months, reflecting analysts’ confidence in the stock. Over this period, the Zacks Consensus Estimate for 2017 has increased by around 5.2% to $2.65 per share. The Zacks Consensus Estimate for 2018 has also moved up 10.6% over the same time frame to $5.34.
Superior Return on Equity (ROE): FMC Corp.’s ROE of 16.8%, as compared with the industry average of 11.2%, manifests the company’s efficiency in utilizing shareholder’s funds.
Growth Drivers in Place: FMC Corp. is witnessing strong momentum in its Lithium unit. The company is expanding its lithium hydroxide production capacity. It is executing this expansion in three phases. The move is based on the growing demand for electric vehicles.
FMC Corp. has executed its Phase I lithium hydroxide expansion on time and budget, achieving 9,000 metric tons of production run rate in September 2017. The Phase 2 expansion is expected to add another 12,000 metric tons of capacity. The company expects its lithium business to deliver strong earnings growth in 2017.
Acquisitions are also adding strength to the company’s agricultural business. The acquisition of Cheminova has reinforced FMC Corp.'s agriculture business and expanded its access in major agricultural end markets. The company will benefit from the cost synergies of the Cheminova buyout.
Moreover, the acquisition of a major portion of DuPont's Crop Protection business has provided a significant growth platform for FMC’s Agricultural Solutions unit. The buyout significantly increases the company’s presence in Asia and Europe.
FMC Corp., in November, raised its earnings view for 2017 and now sees adjusted earnings in the band of $2.59-$2.69 per share for the year (up from the prior view of $2.30 to $2.50 per share), which includes the impact of two months contribution from the DuPont Crop Protection acquisition.
Other Stocks to Consider
Other top-ranked companies in the basic materials space include Koppers Holdings Inc. (KOP - Free Report) , Kronos Worldwide, Inc. (KRO - Free Report) and Westlake Chemical Corporation (WLK - Free Report) , all sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Koppers has an expected long-term earnings growth of 18%. The stock has gained around 21% year to date.
Kronos has an expected long-term earnings growth of 5%. The stock has gained around 113% year to date.
Westlake has an expected earnings growth of 10.6% for the current year. Its shares are up roughly 80% year to date.
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