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What Makes Ashland (ASH) Stock a Solid Choice Right Now

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Anindya Barman
·3 min read
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Ashland Global Holdings Inc.’s ASH shares have gained around 22% over the past six months. We are positive on the company’s prospects and believe that the time is right for you to add the stock to portfolio as it looks promising and is poised to carry the momentum ahead.

Let’s take a look into the factors that make this leading specialty chemicals company an attractive choice for investors right now.

An Outperformer

Shares of Ashland, a Zacks Rank #1 (Strong Buy) stock, have rallied 69.1% over the past year against the 47.6% rise of its industry. It has also outperformed the S&P 500’s roughly 53% rise over the same period.

Estimates Going Up

Over the past two months, the Zacks Consensus Estimate for Ashland for fiscal 2021 has increased around 27%. The consensus estimate for second-quarter fiscal 2021 has also been revised 13.3% upward over the same time frame. The favorable estimate revisions instill investor confidence in the stock.

Solid Growth Prospects

The Zacks Consensus Estimate for earnings for the current fiscal year for Ashland is currently pegged at $5.13, reflecting an expected year-over-year growth of 83.2%. Moreover, earnings are expected to register a 61.9% growth in the fiscal second quarter.

Growth Drivers in Place

Ashland’s restructuring actions have provided it with a profitable, high-margin portfolio focused on high-quality markets and better positioned it for future growth. The company is also taking a number of actions including reduction of operating costs to boost profitability. Cost-reduction measures are expected to support its margins in fiscal 2021. Ashland expects its self-help actions to be a significant contributor to EBITDA growth in the band of $25-$30 million in fiscal 2021.

The company is also benefiting from strong demand in most consumer end markets. Its industrial businesses are also witnessing strong demand recovery. Improved demand for architectural coatings, construction and adhesive applications is aiding its Industrial Specialties segment. Ashland is poised to gain from continued recovery of industrial demand globally from the pandemic-induced slowdown.

Ashland also remains committed to boost its free cash flows through several initiatives. It generated free cash flow of $76 million in the last reported quarter, supported by higher earnings and working capital improvement. The company remains focused on expanding margins and improving free cash flow conversion.

Ashland Global Holdings Inc. Price and Consensus

Ashland Global Holdings Inc. Price and Consensus
Ashland Global Holdings Inc. Price and Consensus

Ashland Global Holdings Inc. price-consensus-chart | Ashland Global Holdings Inc. Quote

Stocks to Consider

Other top-ranked stocks worth considering in the basic materials space include Nucor Corporation NUE, Fortescue Metals Group Limited FSUGY and Impala Platinum Holdings Limited IMPUY.

Nucor has a projected earnings growth rate of 135.3% for the current year. The company’s shares have rallied around 104% in a year. It currently sports a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.

Fortescue has a projected earnings growth rate of 107.8% for the current fiscal. The company’s shares have shot up around 123% in a year. It currently sports a Zacks Rank #1.

Impala Platinum has an expected earnings growth rate of 197.6% for the current fiscal. The company’s shares have surged around 268% in the past year. It currently carries a Zacks Rank #1.

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