Here's Why You Should Hold Onto Chemours (CC) Stock For Now
The Chemours Company CC is gaining from strong execution, higher pricing and cost-cutting measures. However, the company faces challenges from slow demand recovery.
The company’s shares are up 16.8% over a year, compared with 8.2% rise recorded by its industry.
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Higher Opteon Adoption, Cost & Pricing Actions Aid CC
Chemours, a Zacks Rank #3 (Hold) stock, is gaining from strong execution and its efforts to reduce costs. Its cost-reduction program along with its productivity and operational improvement actions across its businesses are expected to support its margins in 2023. It is also taking appropriate pricing measures to counter cost inflation in raw materials.
The company’s Thermal & Specialized Solutions segment is also benefiting from healthy demand in refrigerants. It is witnessing strong adoption of the Opteon platform. The company remains committed toward driving Opteon adoption. Higher prices are also contributing to the segment’s sales.
The company also remains focused on boosting its cash flows and returning value to shareholders. It generated cash from operating activities of $754 million and free cash flow of $447 million in 2022. It also paid dividends worth $154 million and returned $495 million through share repurchases during the year. CC also repurchased $37 million of common stock and paid dividends worth $38 million in the second quarter of 2023. It expects to generate free cash flow of more than $325 million in 2023.
Weak Demand a Concern
Continued softness in advanced materials is likely to weigh on volumes in the company's Advanced Performance Materials segment. Demand is expected to remain weak in advanced materials for products that serve economically sensitive end markets. The company’s shift to higher value and differentiated products has also resulted in weaker demand in non-strategic end markets. Chemours sees weaker demand in advanced materials in second-half 2023.
While destocking in China and Europe has largely ended, the pace of demand recovery is expected to be modest over the near term, given the weak global economic recovery and continued macroeconomic uncertainties. This is likely to adversely impact volumes in the Titanium Technologies segment in the third quarter.
Chemours updated its adjusted EBITDA guidance for 2023 factoring in weaker demand visibility in the second half of 2023. It now anticipates adjusted EBITDA for 2023 to be between $1.100 billion and $1.175 billion, down from its prior view of $1.20 billion and $1.30 billion.
Stocks to Consider
Better-ranked stocks worth a look in the basic materials space include Carpenter Technology Corporation CRS, Hawkins, Inc. HWKN and Alamos Gold Inc. AGI.
The Zacks Consensus Estimate for current fiscal-year earnings for CRS is currently pegged at $3.48, implying year-over-year growth of 205.3%. Carpenter Technology currently carries a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Carpenter Technology has a trailing four-quarter earnings surprise of roughly 10%, on average. The stock has rallied around 100% over the past year.
Hawkins currently carrying a Zacks Rank #1. It has a projected earnings growth rate of 18.9% for the current year.
Hawkins has a trailing four-quarter earnings surprise of roughly 25.6%, on average. HWKN shares are up around 51% in a year.
Alamos Gold currently carries a Zacks Rank #2 (Buy). The Zacks Consensus Estimate for AGI's current-year earnings has been revised 7.5% upward over the past 60 days.
The Zacks Consensus Estimate for current fiscal-year earnings for Alamos Gold is currently pegged at 43 cents, implying year-over-year growth of 53.6%. AGI shares have surged around 61% in a year.
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Carpenter Technology Corporation (CRS) : Free Stock Analysis Report
Alamos Gold Inc. (AGI) : Free Stock Analysis Report
The Chemours Company (CC) : Free Stock Analysis Report
Hawkins, Inc. (HWKN) : Free Stock Analysis Report
