What are the best specialty chemical companies to invest in? DuPont, AkzoNobel, Huntsman, Shell, and others are among the big names in the field. Read on to find out what you should know about each. You might also want to consider other stocks in the same industry that are undergoing an exciting growth period. Listed below are four such companies that have a strong future. They are highly profitable, and they produce products that are used in nearly every industry in the world.
DuPont
As one of the oldest and largest chemical conglomerates in the world, DowDuPont has generated over $86 billion in sales in 2018. This is more than the combined sales of the privately held Sabic in Saudi Arabia, BASF in Germany and the Formosa Plastics Group in Taiwan. As a result, DowDuPont has decided to separate into three separate chemical companies: Dow will focus on specialty chemicals while DuPont will concentrate on commodity chemicals. Corteva will concentrate on agricultural chemicals.
The transportation segment of DuPont is well-positioned to capture the huge opportunity arising from the worldwide growth of electric and hybrid vehicles. Its materials are used to help make vehicles lighter, and also in thermal management, because batteries produce heat. DuPont expects to earn roughly $330 from each electric vehicle sold. By contrast, the revenue generated by a conventional internal combustion engine is $195. With this growth, DuPont’s earnings should remain at or near this level.
AkzoNobel
In its early 1990s, AkzoNobel focused on improving efficiency. The company’s operations were bloated compared with those of its peers in the United States and Japan, thanks to restrictive regulations in Europe. Still, the company enjoyed great success in the pharmaceutical industry, where it had a leading position with Desogen, the world’s best-selling birth control formula. Its paints and coatings division also continued to grow steadily, earning the company steady sales and profits.
Recently, AkzoNobel completed a private sale to Carlyle Group and GIC for an enterprise value of EUR10.1 billion. In addition, it will return the majority of the net proceeds to shareholders, including a large part of its cash. The deal includes an equity investment from the Carlyle Europe Partners IV and VII funds. The Singapore government-owned GIC will also invest in the sale.
Huntsman
As the largest privately held chemical company in North America, Huntsman produces and markets petrochemical products that are used in a variety of industries, including the automotive industry, plastics industry, personal care industry, and chemical industry. The company’s diverse product portfolio includes performance chemicals, polyethylene, and maleic anhydride. Investors who buy Huntsman at the top of the business cycle may be disappointed, but those who wait for a downturn will benefit from a company’s growth.
Since 2000, Huntsman has been a part of the world’s leading chemical companies, making some of the most important chemicals in the world. Huntsman sold its styrenics business to NOVA Chemical Company, a specialty chemical company based in New Jersey. Huntsman also sold its ethanolamines business to Oxiteno, which is a specialty chemical arm of Grupo Ultra, the second largest producer of ethoxylates. The company is also developing its recycling capabilities, purchasing CarbonLITE’s polyethylene terephthalate recycling plant in Dallas and building a US PET depolymerization plant with Loop Industries.
Shell
The chemical portfolio of Shell is comprised of six distinct product businesses, as well as two international joint ventures. The company has over 8,500 employees worldwide, and its manufacturing operations are primarily focused on high-volume, high-value products. Shell has a long history of innovation, and its history in the chemical industry spans more than a century. During the past decade, the company has stepped up its environmental efforts, and its philanthropy is reflected in the success of its companies.
The evolution of the industry has blurred the line between commodities and specialties. During the 1990s, specialty chemical businesses typically outperformed their commodity counterparts in profitability and sales growth. However, since then, the market has experienced considerable financial convergence. The top 50 chemical companies show virtually identical sales growth and operating margin results. However, the industry has become increasingly commoditized. That’s a bad thing for consumers.