The materials sector includes companies engaged in the discovery, development, and processing of raw materials, which are used across a broad range of sectors and industries. Materials stocks include manufacturers of products as varied as plastic, fertilizer, paper, concrete, and metals. Prominent names include Ecolab Inc. (ECL), Air Products and Chemicals Inc. (APD), and DuPont de Nemours Inc. (DD).
Materials stocks, represented by the Materials Select Sector SPDR ETF (XLB), have outperformed the broader market. The outlook for a global economic recovery has brightened as increasing numbers of people have become vaccinated to protect against COVID-19. The XLB’s total return was 48.6% over the past 12 months, beating the Russell 1000’s total return of 39.9%. These market performance numbers and all statistics in the tables below are as of June 17, 2021.
Here are the top 3 materials stocks with the best value, the fastest growth, and the most momentum.
These are the materials stocks with the lowest 12-month trailing price-to-earnings (P/E) ratio. Because profits can be returned to shareholders in the form of dividends and buybacks, a low P/E ratio shows you’re paying less for each dollar of profit generated.
| Best Value Materials Stocks | |||
|---|---|---|---|
| Price ($) | Market Cap ($B) | 12-Month Trailing P/E Ratio | |
| Celanese Corp. ( CE) |
147.84 | 16.7 | 8.2 |
| The Mosaic Co. ( MOS) |
30.35 | 11.5 | 11.3 |
| NewMarket Corp. ( NEU) |
312.30 | 3.4 | 13.4 |
Source: YCharts
- Celanese Corp.: Celanese is a global producer of chemicals and advanced materials. It produces acetyl, acetate, vinyl emulsion, and engineered polymers.
- The Mosaic Co.: The Mosaic Co. is a producer and distributor of crop nutrient products. The company provides feed ingredients, concentrated phosphates, potash, and related products to the agricultural industry worldwide. The Mosaic Co. announced in early June that it was immediately closing its K1 and K2 potash mine shafts at Esterhazy in the Canadian province of Saskatchewan. The company said the closures were due to an acceleration of brine inflows, posing increased risk of flooding. Mosaic is currently building a K3 mine shaft and plans to resume production at its Colonsay potash mine, which will help to offset the loss of production from the closures of the other two shafts.
- NewMarket Corp.: NewMarket develops, manufactures, and blends fuel and lubricant additives. The company supplies its products to refiners and other companies that sell petroleum products. Its products are used in transportation and industrial equipment.
These are the top materials stocks as ranked by a growth model that scores companies based on a 50/50 weighting of their most recent quarterly year-over-year (YOY) percentage revenue growth and their most recent quarterly YOY earnings-per-share (EPS) growth. Both sales and earnings are critical factors in the success of a company. Therefore ranking companies by only one growth metric makes a ranking susceptible to the accounting anomalies of that quarter (such as changes in tax law or restructuring costs) that may make one or the other figure unrepresentative of the business in general. Companies with quarterly EPS or revenue growth of over 2,500% were excluded as outliers.
| Fastest Growing Materials Stocks | ||||
|---|---|---|---|---|
| Price ($) | Market Cap ($B) | EPS Growth (%) | Revenue Growth (%) | |
| Element Solutions Inc. ( ESI) |
23.67 | 5.9 | 1,000 | 21.5 |
| Southern Copper Corp. ( SCCO) |
59.41 | 45.9 | 253.6 | 47.3 |
| LyondellBasell Industries NV ( LYB) |
102.42 | 34.2 | 657.1 | 21.2 |
Source: YCharts
- Element Solutions Inc.: Element Solutions is a global specialty chemicals company. It makes and supplies chemical products used in consumer electronics, communication infrastructure, automobiles, industrial surface finishing, consumer packaging, offshore oil production and drilling, and more. Element Solutions recently announced that it offered to acquire Coventya Holding SAS, a global provider of specialty chemicals for the surface finishing industry, for approximately 420 million euros ($498.1 million). The transaction is expected to close late in the third quarter or in the fourth quarter of 2021.
- Southern Copper Corp.: Southern Copper explores, develops, and produces copper. In the process, the company also produces several by-products including molybdenum, silver, zinc, sulfuric acid, and other metals. It conducts mining operations in Peru and Mexico.
- LyondellBasell Industries NV: LyondellBasell Industries makes petrochemical products that are used in a wide range of industries, including in the manufacturing of personal care products, lightweight plastics, food packaging, automotive components, for medical applications, biofuels, and more. The company announced in late May that its board of directors had approved a 7.6% increase in its quarterly dividend. The new dividend of $1.13 per share was scheduled to be paid on June 14, 2021.
These are the materials stocks that had the highest total return over the last 12 months.
| Materials Stocks with the Most Momentum | |||
|---|---|---|---|
| Price ($) | Market Cap ($B) | 12-Month Trailing Total Return (%) | |
| Olin Corp. ( OLN) |
44.94 | 7.2 | 262.5 |
| Freeport-McMoRan Inc. ( FCX) |
35.15 | 51.5 | 229.2 |
| The Mosaic Co. (MOS) | 30.35 | 11.5 | 130.0 |
| Russell 1000 | N/A | N/A | 39.9 |
| Materials Select Sector SPDR ETF (XLB) | N/A | N/A | 48.6 |
Source: YCharts
- Olin Corp.: Olin manufactures and distributes chemical products, such as chlorine and caustic soda, vinyls, epoxies, chlorinated organics, bleach, and hydrochloric acid. It also makes sporting ammunition and small caliber military ammunition.
- Freeport-McMoRan Inc.: Freeport-McMoRan is a leading international mining company with significant reserves of copper, gold, and molybdenum. The company has operations in North and South America as well as in Indonesia. Freeport-McMoRan announced in April financial results for Q1 of its 2021 fiscal year (FY), the three-month period ended March 31, 2021. The company posted net income attributable to its common stockholders (which excludes non-controlling interests) of $718 million, a significant turnaround from the net loss of $491 million in the year-ago quarter. Revenue for the quarter rose 73.3%.
- The Mosaic Co.: See above for company description.
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