5 Top Value Picks From the Rebounding Materials Sector
The U.S. economy seems to have started its recovery path thanks to the availability of the COVID-19 vaccine and the prospects of another round of fiscal stimulus. This, in turn, is set to have a positive impact on the cyclical materials sector, which is dependent on the proper functioning of the economy. Value stocks and, in turn, the materials sector was relatively unloved for the major part of last year as investors shifted their focus to growth stocks within the technology space as the pandemic shut down most economic activities. This compelled people to stay at home and be highly dependent on technology for their day-to-day activities.
Nonetheless, the gradual reopening of the economy is helping the materials sector to make a comeback. In fact, the Materials Select Sector SPDR (XLB) has already gained 6.1% year to date, signaling that an upturn might be in the cards. Moreover, the acceleration in the vaccination program in the United States should also provide a substantial boost to resuming economic activities. Notably, data from the Centers for Disease Control and Prevention showed that the average number of vaccine doses administered per day in the United States reached 2 million, as quoted in a New York Times article. Adding to that positive news is the fact that the FDA recently approved another COVID-19 vaccine for emergency use, bringing the total number of vaccines approved in the country to three.
Meanwhile, the economy is also set to receive another leg up from President Joe Biden’s proposed $1.9 trillion fiscal package. Per the latest development, House Majority Leader Steny H. Hoyer (MD) stated that the House is ready to pass the bill on Mar 10 and send it to the President’s desk for signing, as mentioned in a press release.
Such positive developments on both the vaccine and fiscal stimulus fronts, bode well for value stocks and in turn, the materials sector as the economy looks poised to fully resume its activities. Reflective of this, the Congressional Budget Office estimated that the U.S. economy is set to recover to its pre-pandemic size by the middle of 2021 and the GDP is set to grow 4.6% in 2021, following the contraction of 3.5% last year, as quoted in a MarketWatch article.
5 Top Stocks to Buy Now
The U.S. economy seems to be turning around following positive developments with regards to vaccination as well as the proposed fiscal stimulus aid. Hence, this seems to be a good time to invest in value stocks from the materials space that can make the most of the economic reopening. Our research shows that stocks with a Value Score of A or B when combined with a Zacks Rank #1 (Strong Buy) or 2 (Buy) offer the best investing opportunities in the value space. Notably, we have handpicked five such stocks. You can see the complete list of today’s Zacks #1 Rank stocks here.
Schnitzer Steel Industries, Inc. SCHN recycles ferrous and nonferrous scrap metals; and manufactures finished steel products worldwide. The company currently has a Zacks Rank #1 and Value Score of B. The Zacks Consensus Estimate for its current-year earnings increased 80.9% over the past 60 days. The company’s expected earnings growth rate for the current year is more than 100%.
The Mosaic Company MOS, through its subsidiaries, produces and markets concentrated phosphate and potash crop nutrients in North America and internationally. The company currently has a Zacks Rank #1 and Value Score of B. The Zacks Consensus Estimate for its current-year earnings increased 74.8% over the past 60 days. The company’s expected earnings growth rate for the current year is more than 100%.
Westlake Chemical Corporation WLK, together with its subsidiaries, manufactures and markets basic chemicals, vinyls, polymers, and building products worldwide. The company currently has a Zacks Rank #1 and Value Score of B. The Zacks Consensus Estimate for its current-year earnings increased 76.4% over the past 60 days. The company’s expected earnings growth rate for the current year is more than 100%.
Domtar Corporation UFS designs, manufactures, markets and distributes communication papers, specialty and packaging papers, and absorbent hygiene products in the United States, Canada, Europe, Asia, and internationally. The company currently has a Zacks Rank #2 and Value Score of A. The Zacks Consensus Estimate for its current-year earnings increased 25.6% over the past 60 days. The company’s expected earnings growth rate for the current year is more than 100%.
Dow Inc. DOW provides various materials science solutions for consumer care, infrastructure, and packaging markets in the United States, Canada, Europe, the Middle East, Africa, India, the Asia Pacific, and Latin America. The company currently has a Zacks Rank #2 and Value Score of A. The Zacks Consensus Estimate for its current-year earnings increased 26.3% over the past 60 days. The company’s expected earnings growth rate for the current year is more than 100%.
5 Stocks Set to Double
Each was hand-picked by a Zacks expert as the #1 favorite stock to gain +100% or more in 2020. Each comes from a different sector and has unique qualities and catalysts that could fuel exceptional growth.
Most of the stocks in this report are flying under Wall Street radar, which provides a great opportunity to get in on the ground floor.
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Westlake Chemical Corporation (WLK) : Free Stock Analysis Report
Dow Inc. (DOW) : Free Stock Analysis Report
The Mosaic Company (MOS) : Free Stock Analysis Report
Schnitzer Steel Industries, Inc. (SCHN) : Free Stock Analysis Report
Domtar Corporation (UFS) : Free Stock Analysis Report
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