Time to Buy These Top-Rated Basic Materials Stocks Amid an Uptick in Inflationary Data
An uptick in inflation can of course be beneficial to many basic materials companies as they are often able to capitalize on higher commodity prices.
Markets have remained resilient despite February’s CPI (Consumer Price Index) and PPI (Producer Price Index) data coming in hotter than anticipated but it may be time to consider buying several highly ranked basic materials stocks and here are a few to consider.
Balchem BCPC
Boasting a Zacks Rank #1 (Strong Buy) we’ll start with Balchem Corporation which provides solutions and products for a variety of industries including specialty-packed chemicals for healthcare and agricultural markets along with derivatives for use in industrial applications.
Balchem’s top and bottom line expansion is intriguing with total sales projected to rise 6% this year and pop another 5% in fiscal 2025 to $1.03 billion. More impressive, annual earnings are forecasted to soar 23% in FY24 and jump another 12% next year to $4.64 per share. Furthermore, Balchem’s stock is up +23% in the last year and there could be more upside ahead as FY24 earnings estimate revisions have climbed 14% over the last 60 days with FY25 EPS estimates soaring 18%.
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Hawkins HWKN
Substantial growth prospects are reason to consider Hawkins’ stock which sports a Zacks Rank #2 (Buy). Hawkins distributes special chemicals and ingredients used in water treatment along with health and nutrition products.
Most enticing is that Hawkins’ EPS is expected to leap 26% in FY24 to $3.61 versus $2.86 a share last year. Plus, FY25 EPS is expected to rise another 1%. Total sales are projected to dip -2% in FY24 but rebound and jump 8% in FY25 to $984.42 million.
Notably, Hawkins’ stock has soared +81% over the last year and has continued to rally with the company now surpassing earnings expectations for nine consecutive quarters. With that being said, Hawkins’ stock still trades at a reasonable 21X forward earnings multiple which is on par with the S&P 500 and nicely beneath its Zacks Chemical-Specialty industry average of 25.2X.
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L.B. Foster FSTR
Also sporting a Zacks Rank #2 (Buy) is L.B. Foster, a distributor of rail and trackwork, piling, highway, and tubular products. Trading just under $25, L.B. Foster’s stock has skyrocketed over +100% in the last year.
Correlating with its stellar price performance, annual earnings are forecasted to catapult to $1.07 per share in FY24 compared to $0.13 a share in 2023. Even better, FY25 earnings are expected to climb another 52% to $1.63 per share.
L.B. Foster’s stock trades at 22X forward earnings and just 0.48X sales with its top line expected to dip -1% this year but rebound and rise 7% in FY25 to $577.93 million.
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Takeaway
While investors may be on edge about which direction markets may go amid an uptick in inflation these top-rated basic material stocks should be able to sustain and perhaps benefit from pricing power. This also correlates with the notion that the strong price performances of Balchem, Hawkins, and L.B. Foster’s stock could continue.
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L.B. Foster Company (FSTR) : Free Stock Analysis Report
Balchem Corporation (BCPC) : Free Stock Analysis Report
Hawkins, Inc. (HWKN) : Free Stock Analysis Report
