We recently published a list of 11 Undervalued Chemical Stocks to Buy Now. In this article, we are going to take a look at where Eastman Chemical Company (NYSE:EMN) stands against other undervalued chemical stocks to buy now.
President Trump is looking to place 25% tariffs on goods from Canada and Mexico and this could negatively influence US industries and critical sectors beyond just autos. According to a report by CNBC in January 2025 by Lori Ann LaRocco, Canada is the largest partner with the US for critical chemicals.
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The US chemicals industry also exports a huge amount of products to Canada. In 2023, US firms sold over $28 billion in chemicals to Canadian customers. On the other hand, Canadian partners export approximately $25 billion in chemicals to the US annually, as per the American Chemistry Council.
Texas, California, Louisiana, North Carolina, Illinois, Ohio, Indiana, New York, Pennsylvania, and Iowa are the top chemical-producing states and they account for about 66% of total US chemical production while the rest of the chemicals are imported. According to the American Chemical Council, Canada is the leading source of chemical imports to the US and accounted for 18.1% of the total chemical imports in 2023. Canada is followed by China and South Korea.
Eric Byer, CEO of the Alliance for Chemical Distribution, pointed out that if there is a trade war between Canada and the US, the price of critical chemicals could lead to inflationary pressures on US consumers and industries. According to Byer, Canada exports approximately 80% of the chlorine used in disinfecting drinking water for the West Coast states. He also pointed out that the US exports large amounts of phenol to Canada for use in the wood products industry. Some of that treated lumber is then also exported back into the US from Canada for domestic consumption and home construction purposes.
The US-Canada chemical trade relationship supports other industries as well and disruption of this trade between the two countries could have far-reaching consequences.
Our Methodology
To compile our list of the 11 undervalued chemical stocks to buy now, we looked for the largest chemical companies. We reviewed our own rankings, financial media reports, ETFs, and various online resources to compile a list of the best chemical stocks. To find undervalued chemical stocks, we narrowed down our selection by looking for stocks trading at under 20 times their forward earnings as of March 28, 2025. Next, we focused on the top 11 undervalued chemical stocks most favored by institutional investors. Data for the hedge fund sentiment surrounding each stock was taken from Insider Monkey’s Q4 2024 database of more than 1,000 elite hedge funds. Finally, the 11 undervalued chemical stocks to buy were ranked in ascending order based on the number of hedge funds holding stakes in them as of Q4 2024.
Why do we care about what hedge funds do? 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 373.4% since May 2014, beating its benchmark by 218 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)
Forward P/E: 10.31
Number of Hedge Fund Holders: 37
Eastman Chemical Company (NYSE:EMN) is an American multinational chemical and specialty materials company that produces a broad range of advanced materials, chemicals, fibers, and additives and functional products for everyday items. Addressing the needs of customers in more than 100 countries, the company serves attractive end markets such as transportation, building and construction, health and wellness, and consumables. Eastman Chemical Company (NYSE:EMN) ranks among the best chemical stocks to invest in.
The company is focusing on driving growth and financial performance through circular economy initiatives. In Q4 2024, Eastman Chemical Company (NYSE:EMN) continued to operate the Kingsport methanolysis facility, setting it up to deliver strong earnings growth in 2025. The company is investing in growth initiatives and launched the world’s largest molecular recycling facility to advance its leadership position in the circular economy. During the quarter, Eastman Chemical Company (NYSE:EMN) also made progress in building its Renew sales funnel. Through these initiatives, the company expects substantial EBITDA growth and projects that it will generate over $2.1 billion of EBITDA and approximately $1.6 billion of cash from operations in a stable economic environment before the benefit of circular investments. Eastman Chemical Company (NYSE:EMN) expects to see an additional EBITDA of $500 million by 2029. This will include $350 million of EBITDA from methanolysis projects in Kingsport, Tennessee and Longview, Texas, as well as $150 to $200 million of EBITDA from its cellulosic biopolymer platform. In 2025, Eastman Chemical Company (NYSE:EMN) expects that the Kingsport methanolysis facility will generate an incremental $75 to $100 million of EBITDA contribution compared to 2024.
To achieve these targets from its circular initiatives, the company will continue to invest in organic growth. Eastman Chemical Company (NYSE:EMN) expects capital expenditures of around $800 million in 2025 and between $800 million and $1 billion in 2026 and 2027.
Overall, EMN ranks 5th on our list of undervalued chemical stocks to buy now. While we acknowledge the potential of EMN, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. If you are looking for an 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.