Shares of PPG Industries ( PPG) reached a new 52-week high of $202.88 on May 30, above its previous high of $201.59. Its shares ended the day at $201.61.
The U.S. coatings giant, which has a market cap of roughly $28 billion, has seen its shares shot up roughly 31% over a year. Average volume of shares traded over the last three months is around 727.8K.
What’s Driving PPG Up?
PPG Industries’ adjusted earnings for first-quarter 2014, reported on Apr 17, topped the Zacks Consensus Estimate. Reported profit jumped on continued strength in the company’s coatings business and its cost management initiatives. Healthy momentum across aerospace and automotive markets aided the results. PPG Industries sees favorable market conditions across major end-markets in 2014.
PPG Industries, a Zacks Rank #3 (Hold) stock, has a diversified business, both in terms of products offered and geographical presence. It has a leading position in several paints and coatings end markets.
PPG Industries is taking steps to grow its business inorganically by making a number of acquisitions. The acquisition of Akzo Nobel’s ( AKZOY) North American architectural coatings business has reinforced its branded paint product offerings and scale in the North American architectural paint market.
PPG Industries also has an impressive record of returning cash to shareholders through dividends and share buybacks. The company, in Apr 2014, raised its quarterly dividend by 10% to 67 cents per share. Moreover, its Board authorized the repurchase of shares worth $2 billion
Moreover, PPG Industries is pursuing a $102 million business restructuring focused on achieving cost synergies associated with the North American architectural coatings business takeover. The company’s growth strategies coupled with cost control measures delivered significant value to its shareholders last year and is expected to do the same in 2014.
That said, we take into account softness in Europe and a still challenging demand environment in the region. Some of PPG Industries’ key end-markets such as non-residential construction, marine coatings and European architectural coatings remain sluggish.
Other Stocks to Consider
Other companies in the chemical space that are worth considering include Compass Minerals International Inc. ( CMP) and L'Air Liquide SA ( AIQUY). While Compass Minerals has a Zacks Rank #1 (Strong Buy), L'Air Liquide has a Zacks Rank #2 (Buy).