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Here's Why You Should Keep Huntsman (HUN) in Your Portfolio
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Huntsman Corporation (HUN - Free Report) is expected to benefit from its investment in downstream businesses and differentiated product innovation as well as strategic acquisitions amid headwind from weak demand in certain markets.
The company’s shares are down 8.3% over a year compared with the 9.5% decline of its industry.
Let’s find out why this Zacks Rank #3 (Hold) stock is worth retaining at the moment.
What’s Aiding HUN?
Huntsman 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, which accounted for more than half of its revenues last year, 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. The company has expanded its global MDI capacity by 370,000 kilotons since 2009 and accelerated downstream growth with construction of five downstream facilities. It is also constructing an MDI splitter in Geismar, LA that will also support downstream growth.
Huntsman should also gain from synergies of strategic acquisitions. The buyout of Demilec, a leading manufacturer and distributor of spray polyurethane foam ("SPF") insulation systems in North America, is expected to offer significant synergies.
Moreover, the acquisition of Icynene-Lapolla, a leading North American manufacturer and distributor of SPF, is in line with Huntsman’s strategy of expanding its downstream polyurethanes business. The combination of Icynene-Lapolla with Demilec is expected to create the world's leading supplier of spray foam products. Huntsman expects the integrated business to deliver annualized synergies of around $15 million by the end of 2021.
The company, in May 2020, also completed the acquisition of CVC Thermoset Specialties, a North American specialty chemical producer that serves industrial composites, adhesives and coatings markets. The buyout is in sync with the company’s strategy of expanding its specialty Advanced Materials portfolio. Huntsman anticipates the acquisition to deliver roughly $15 million of annualized synergies within two years.
A Few Headwinds
Huntsman is seeing soft demand in certain markets such as automotive and construction amid the coronavirus-induced global economic weakness. The company is witnessing lower orders in automotive across North America and Europe. It expects overall sales for the second quarter to be down 30-35% year over year.
The company’s Advanced Materials unit is exposed to headwind from weaker demand in industrial markets. It expects coronavirus to materially impact several core markets in this segment through the balance of the year. Volumes in this segment are expected to remain under pressure in the second quarter. The company anticipates results in this unit to be a little below expectations in the second quarter.
Moreover, the company’s Performance Products unit is facing challenges from lower volumes in ethyleneamines. Huntsman expects this segment to be affected by a material slowdown in the world economy and envisions lower volumes in the second quarter. Weaker conditions are expected to affect its businesses in North America and Europe in this segment.
For the Textiles Effects segment, the company expects results to be weaker than expected in the second quarter primarily due to the prolonged impact of mandatory shutdowns in major textile-manufacturing regions.
Harmony Gold has an expected earnings growth rate of 264.3% for the current fiscal year. The company’s shares have shot up around 115% in the past year. It presently carries a Zacks Rank #2.
AngloGold has a projected earnings growth rate of 109.9% for the current year. The company’s shares have surged around 72% in a year. It currently has a Zacks Rank #2.
5 Stocks to Soar Past the Pandemic: In addition to the companies you learned about above, we invite you to learn about 5 cutting-edge stocks that could skyrocket from the exponential increase in demand for “stay at home” technologies. This could be one of the biggest buying opportunities of the decade.
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Here's Why You Should Keep Huntsman (HUN) in Your Portfolio
Huntsman Corporation (HUN - Free Report) is expected to benefit from its investment in downstream businesses and differentiated product innovation as well as strategic acquisitions amid headwind from weak demand in certain markets.
The company’s shares are down 8.3% over a year compared with the 9.5% decline of its industry.
Let’s find out why this Zacks Rank #3 (Hold) stock is worth retaining at the moment.
What’s Aiding HUN?
Huntsman 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, which accounted for more than half of its revenues last year, 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. The company has expanded its global MDI capacity by 370,000 kilotons since 2009 and accelerated downstream growth with construction of five downstream facilities. It is also constructing an MDI splitter in Geismar, LA that will also support downstream growth.
Huntsman should also gain from synergies of strategic acquisitions. The buyout of Demilec, a leading manufacturer and distributor of spray polyurethane foam ("SPF") insulation systems in North America, is expected to offer significant synergies.
Moreover, the acquisition of Icynene-Lapolla, a leading North American manufacturer and distributor of SPF, is in line with Huntsman’s strategy of expanding its downstream polyurethanes business. The combination of Icynene-Lapolla with Demilec is expected to create the world's leading supplier of spray foam products. Huntsman expects the integrated business to deliver annualized synergies of around $15 million by the end of 2021.
The company, in May 2020, also completed the acquisition of CVC Thermoset Specialties, a North American specialty chemical producer that serves industrial composites, adhesives and coatings markets. The buyout is in sync with the company’s strategy of expanding its specialty Advanced Materials portfolio. Huntsman anticipates the acquisition to deliver roughly $15 million of annualized synergies within two years.
A Few Headwinds
Huntsman is seeing soft demand in certain markets such as automotive and construction amid the coronavirus-induced global economic weakness. The company is witnessing lower orders in automotive across North America and Europe. It expects overall sales for the second quarter to be down 30-35% year over year.
The company’s Advanced Materials unit is exposed to headwind from weaker demand in industrial markets. It expects coronavirus to materially impact several core markets in this segment through the balance of the year. Volumes in this segment are expected to remain under pressure in the second quarter. The company anticipates results in this unit to be a little below expectations in the second quarter.
Moreover, the company’s Performance Products unit is facing challenges from lower volumes in ethyleneamines. Huntsman expects this segment to be affected by a material slowdown in the world economy and envisions lower volumes in the second quarter. Weaker conditions are expected to affect its businesses in North America and Europe in this segment.
For the Textiles Effects segment, the company expects results to be weaker than expected in the second quarter primarily due to the prolonged impact of mandatory shutdowns in major textile-manufacturing regions.
Huntsman Corporation Price and Consensus
Huntsman Corporation price-consensus-chart | Huntsman Corporation Quote
Stocks to Consider
Better-ranked stocks worth considering in the basic materials space include Sandstorm Gold Ltd (SAND - Free Report) , Harmony Gold Mining Company Limited (HMY - Free Report) and AngloGold Ashanti Limited (AU - Free Report) .
Sandstorm Gold has a projected earnings growth rate of 55.6% for the current year. The company’s shares have rallied roughly 77% in a year. It currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Harmony Gold has an expected earnings growth rate of 264.3% for the current fiscal year. The company’s shares have shot up around 115% in the past year. It presently carries a Zacks Rank #2.
AngloGold has a projected earnings growth rate of 109.9% for the current year. The company’s shares have surged around 72% in a year. It currently has a Zacks Rank #2.
5 Stocks to Soar Past the Pandemic: In addition to the companies you learned about above, we invite you to learn about 5 cutting-edge stocks that could skyrocket from the exponential increase in demand for “stay at home” technologies. This could be one of the biggest buying opportunities of the decade.
See the 5 high-tech stocks now>>