Cabot Corporation’s (CBT - Free Report) stock looks promising at the moment. 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 delve deeper into the factors that make this chemical company an attractive investment option.
What’s Working in Favor of CBT?
Solid Rank & VGM Score: Cabot currently sports a Zacks Rank #2 (Buy) and a VGM Score of A. Our research shows that stocks with a VGM Score of A or B, combined with a Zacks Rank #1 (Strong Buy) or #2, offer the best investment opportunities for investors. Thus, the company appears to be a compelling investment proposition at the moment.
An Outperformer: Cabot has outperformed the industry over the past six months. The company’s shares have gained around 15.6% over this period, compared with roughly 3% growth recorded by the industry.
Healthy Growth Prospects: The Zacks Consensus Estimate for earnings for fiscal 2018 for Cabot is currently pegged at $4.12, reflecting an expected year-over-year growth of 20.1%. Moreover, earnings are expected to register a 14.7% growth in fiscal 2019. The company also has an expected long-term earnings per share growth rate of 11%.
Superior Return on Equity (ROE): Cabot’s ROE of 17.4%, as compared with the industry average of 9.6%, manifests the company’s efficiency in utilizing shareholder’s funds.
Upbeat Prospects: Cabot, during its fiscal third quarter call, said that it expects its Reinforcement Materials segment to continue performing strongly in the fiscal fourth quarter on the back of solid operational and commercial execution. For the Performance Chemicals segment, the company expects to maintain margins while driving volume growth in specialty Carbons and Formulations.
The Reinforcement Materials segment is benefiting from strong commercial execution that is driving volumes and margin growth. The Performance Chemicals unit is also gaining from favorable impact from price increase actions. Cabot is taking appropriate pricing actions to offset feedstock cost inflation. The company also remains committed to drive product mix in Performance Chemicals through new product launches and applications.
Moreover, Cabot is expanding its specialty compounds business globally. The acquisition of Tech Blend and commissioning of a new production line at its manufacturing facility in Belgium will help the company expand its global footprint in black masterbatch and compounds. It will also help boost manufacturing capacity to better serve customers globally and grow in advanced polymeric materials.
Cabot, in May, also declared significant expansion of capacity of its global network of carbon black plants. It is expanding its global capacity by more than 300,000 metric tons through a combination of operational improvements, plant expansion and debottlenecking projects.
Other Stocks to Consider
Other top-ranked stocks worth considering in the basic materials space include ArcelorMittal (MT - Free Report) , Nucor Corporation (NUE - Free Report) and Quaker Chemical Corporation (KWR - Free Report) , each carrying a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.
ArcelorMittal has an expected long-term earnings growth rate of 4.8%. The company’s shares are up roughly 17% in a year.
Nucor has an expected long-term earnings growth rate of 12%. The company’s shares have gained around 16% in a year.
Quaker Chemical has an expected long-term earnings growth rate of 11%. The company’s shares have rallied around 35% in a year.
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