We recently compiled a list of the 10 High Growth Chemical Stocks to Buy. In this article, we are going to take a look at where Element Solutions Inc (NYSE:ESI) stands against the other high growth chemical stocks.
One of the key pillars of global manufacturing is the chemical industry. It supports a wide range of industries, including paints, coatings, plastics, specialty chemicals, petrochemicals, and agricultural chemicals. According to The Business Research Company, the chemical industry was valued at $5.6 trillion in 2024, projected to reach $6.16 trillion by 2025 at a compound annual growth rate (CAGR) of 9.7%. The primary drivers of its expansion are technological developments and the growing need for sustainable solutions, particularly in the fields of clean energy and digital transformation.
In 2024, the chemical industry showed signs of recovery as production growth surpassed 2023 levels, with demand steadily rebounding. According to Deloitte’s 2025 Chemical Industry Outlook report, this growing production trend is expected to continue into 2025. Despite the recovering production, the effects of 2023’s downturn are still being felt throughout the industry. Therefore, to counter lower revenues and margins, companies implemented cost-cutting programs in early 2024, which led to significant profit improvements.
Moreover, the chemical industry is seeing a rise in merger and acquisition (M&A) activity. A recent Insider Monkey article, citing a PwC report, stated that the value and volume of chemical M&A deals picked up in the second half of 2024. These deals were influenced by central bank rate cuts and a decrease in inflation. The momentum is expected to continue in 2025 as political and economic instability subsides.
Moving forward, cost-efficiency measures will remain a top priority, with strategies such as plant closures, workforce reductions, and asset rationalization expected to extend through 2025 and 2026. Even though major challenges persist, the industry’s efficiency strategies and resilience have set it up for a more stable future. Facing uneven market conditions, chemical companies are strategically shifting their focus toward high-growth sectors to sustain revenue and long-term growth. Accordingly, industries such as semiconductors, clean energy, and advanced materials are emerging as key priorities, offering strong demand and innovation opportunities.
As evident from the discussion above, the global chemical market is on a steady growth trajectory. This is evident through the projections that see it growing to $8.58 trillion by 2034. Furthermore, it is evident from our discussion that the companies that have been adopting cost-efficiency measures, sustainability initiatives, and strategic investments in high-demand sectors are the ones best positioned for long-term success.
Our Methodology
To compile our list of the 10 High Growth Chemical Stocks to Buy, we used the Finviz stock screener to identify publicly traded chemical companies with a market capitalization of $10 billion or higher, ensuring that only well-established industry leaders were considered.
Next, we extracted each company’s revenue for the recently completed five years. We then calculated their Compound Annual Growth Rate (CAGR) over this period, a key indicator of consistent financial performance and growth potential. Finally, we ranked the companies based on their 5-year CAGR and selected the top 10 companies with the highest growth rates.
Why are we interested in 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 373.4% since May 2014, beating its benchmark by 218 percentage points (see more details here).
An industrial worker in a protective suit operating a complex chemical process.
Element Solutions Inc (NYSE:ESI)
Revenue CAGR: 5.50%
Market Capitalization: $6.33 billion
Element Solutions Inc (NYSE:ESI) is a global specialty chemicals company that serves the electronics, automotive, aerospace, and industrial sectors. The company mainly operates through two segments: Electronics and Industrial & Specialty.
For the year ended December 31, 2024, Element Solutions Inc. (NYSE:ESI) reported net sales of $2.46 billion, which marked 5% year-over-year growth. Net income, on the other hand, more than doubled, rising from $118 million in 2023 to $245 million in 2024. During the same period, adjusted EBITDA surged 11% to a record $535 million, while free cash flow climbed to $294 million. This growth was driven by improved margins and operational efficiencies.
Moreover, Element Solutions Inc (NYSE:ESI) announced the sale of its Graphics segment. This $325 million deal, which is expected to be finalized in the first quarter of 2025, will allow the company to refocus on its core business. Beyond structural changes, the company also prioritized shareholder returns, distributing a substantial $78.2 million in cash dividends during the year. Furthermore, a quarterly dividend of $0.08 per share has been declared for March 2025, indicating continued growth momentum.
Looking forward, Element Solutions Inc. (NYSE:ESI) expects adjusted EBITDA to range between $520 million and $540 million due to the $30 million impact from the Graphics business sale and a $15 million foreign exchange effect. While the pace of industrial recovery remains uncertain, the company is expected to grow due to increasing demand for high-performance computing, electric vehicles, and semiconductors, securing Element Solutions Inc. a place on our list of the 10 High Growth Chemical Stocks to Buy.
Overall ESI ranks 10th on our list of the high growth chemical stocks to buy. While we acknowledge the potential of ESI as an investment, our conviction lies in the belief that certain 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 ESI but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
READ NEXT: 20 Best AI Stocks To Buy Now and Complete List of 59 AI Companies Under $2 Billion in Market Cap.
Disclosure: None. This article is originally published at Insider Monkey.
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