We recently published a list of 12 Best Chemical Stocks to Buy According to Analysts. In this article, we are going to take a look at where Eastman Chemical Company (NYSE:EMN) stands against other best chemical stocks to buy according to analysts.
PwC believes that Chemicals M&A deal value and volume demonstrated signs of a rebound in H2 2024. This was due to numerous factors, such as central banks cutting rates, moderation of inflation and the broader destocking trend starting to subside. The firm expects chemical deal activity to further rebound in H1 2025 due to the easing of economic and political uncertainties across major countries.
Notably, a renewed emphasis on domestic industrial policy and global supply chain realignment, together with higher private equity exits, are expected to result in more assets in the market, fueling the deal activity. David Yankovitz, the US Chemicals Market Leader at Deloitte, believes that the 2025 outlook for the broader chemical sector demonstrates a transition to a high-tech, low-carbon future.
Growth Drivers for Chemicals Industry
The American Chemistry Council (ACC) anticipates a 1.9% rebound in chemical volumes in 2025 after 2 consecutive years of declines as the US economy continues to undergo a soft landing and the housing market witnesses improvement in H2 of the year. Martha Moore, chief economist at the ACC, expects that the US Fed rate cuts will stimulate demand for durable goods and investment. Moore also expects an improvement in manufacturing and industrial production globally in 2025, which can help US exports. That being said, the trade policy is uncertain with the threat of tariffs by the Trump administration.
Amidst the challenges, the economist expects a recovery in demand for the US chemicals, although a modest one, in 2025, which will be weighted towards H2 2025 as the lag effects of the rate cuts take hold.
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Transformative Trends Affecting the Chemicals Sector
David Yankovitz expects an improvement in operational excellence via cost-reduction programs and asset rationalization. Amidst the fluctuating market conditions, several chemical companies continue to emphasize cost-effectiveness. With the help of strategic cost-reduction programs and asset rationalization, companies have been striving to improve operational effectiveness. The chemical companies tend to navigate uneven growth throughout several end markets. With a strong focus on high-growth sectors like semiconductors and clean energy, companies have been positioning themselves to capitalize on such opportunities.
Apart from these trends, Yankovitz believes that innovation remains critical for advancing the chemical industry. Organizations continue to invest in enhancing their product offerings, optimizing manufacturing processes, and collaborating throughout ecosystems to fuel sustainability and performance. Such a comprehensive approach to innovation might help businesses cater to the changing market demands. Notably, it also helps prepare for leadership in a low-carbon, high-tech future.
Our Methodology
To list the 12 Best Chemical Stocks to Buy According to Analysts, we used a screener and online rankings to shortlist the chemical stocks. Next, we chose the ones in which analysts saw upside potential. Finally, the stocks were ranked in ascending order of their average upside potential, as of 29th January. We also mentioned hedge fund sentiments around each stock, as of Q3 2024.
At Insider Monkey we are obsessed with the stocks that hedge funds pile into. The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
A close-up of a chemist in a white lab coat, mixing raw materials for specialty products.
Eastman Chemical Company (NYSE:EMN)
Average Upside Potential: 24.1%
Number of Hedge Fund Holders: 26
Eastman Chemical Company (NYSE:EMN) is engaged in the business of chemicals through advanced materials, additives, specialty chemicals, and fibers, catering to end markets including automotive, construction, consumer goods, and healthcare. BofA has a positive outlook on the company. The firm believes that Eastman Chemical Company (NYSE:EMN)’s growth prospects, mainly in methanolysis, are attractive. The analysts noted the potential for revenue and earnings growth over the upcoming few years, fueled by volume growth that surpasses the company’s end markets and by methanolysis, a chemical recycling process.
Eastman Chemical Company (NYSE:EMN)’s growth strategy revolves around its commitment to circular economy solutions, mainly in plastics recycling. It continues to make progress in its methanolysis technology, which enables the recycling of polyester waste. Furthermore, it also has significant confidence in this new vector of growth, which is expected to create value moving forward. Eastman Chemical Company (NYSE:EMN) is leveraged to a macroeconomic recovery and projects generating significant EBITDA growth via its circular economy initiatives.
The company expects additional EBITDA of more than $500 million by 2029 through such initiatives. This target underlines Eastman Chemical Company (NYSE:EMN)’s commitment to sustainability and its potential to capture a share of the dynamic market for recycled materials. It anticipates generating an incremental $75 million – $100 million of EBITDA contribution in 2025 as compared to 2024 from the Kingsport methanolysis facility.
Overall, EMN ranks 8th on our list of best chemical stocks to buy according to analysts. While we acknowledge the potential of EMN as an investment, our conviction lies in the belief that some deeply undervalued AI stocks hold greater promise for delivering higher returns, and doing so within a shorter time frame. If you are looking for a deeply undervalued AI stock that is more promising than EMN but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. This article is originally published at Insider Monkey.