This cyclical company has beaten analysts’ estimates for the past four quarters, and four analysts have raised their 2017 earnings estimates for the company in the past 30 days.
Chemours (CC)
From DRIP Investor
Chemours (CC) is not a household name with most investors, but that hasn’t stopped the stock from posting impressive gains so far in 2017. The company, spun off from DuPont in 2015, is a provider of performance chemicals. The firm’s titanium technologies segment sells titanium dioxide, which is used in a variety of architectural and industrial coatings applications, as well as various packaging applications.
Its fluoroproducts segment provides refrigerants and coatings under the Teflon, Viton, and Krytox brand names. Its chemical solutions segment offers a variety of industrial and specialty chemicals used in oil refining, agriculture, industrial, and mining applications.
The company’s operations have been gaining nice momentum, which has Wall Street playing catch up with the company’s earnings. Indeed, per-share profits have handily beaten consensus estimates in the last four quarters, and earnings estimates have been revised upward aggressively in the last 90 days.
Despite the stock’s impressive gain this year, these shares still trade at less than 12 times the expected 2018 earnings of $4.73. The biggest risk for these shares is a slowdown in the economy. Chemours will be sensitive to the economic cycle, which means these shares will likely show above-average volatility over time.
Nevertheless, with the U.S. economy continuing to show steady growth, and overseas economies improving as well, the firm seems to have plenty of runway for earnings to grow over the next 24 months. The strong earnings growth should provide some lift to the quarterly dividend, which is only $0.03 per share.
Admittedly, I am not a big fan of cyclical stocks. But I find Chemours interesting given the fact that it is a fairly new public company via its spin-off, and I like owning spin-offs. Also, the stock seems to be in the market sweet spot for industrial stocks right now. In some respects, I view these shares more as a 24-month opportunity as opposed to a stock that will show steady gains for the next 5-10 years. However, for investors who want some industrial exposure in a stock that is off the radar of most investors, these shares should fit the bill.
Chemours’ direct-purchase plan has a minimum initial investment of $250. The firm will waive the minimum if an investor agrees to automatic monthly investment via electronic debit of a bank account of at least $50. There is a $10 enrollment fee. Optional purchase fees are $5 ($2.50 if made with automatic monthly investment) plus $0.05 per share. Dividend reinvestment fee is 5% of the amount reinvested (maximum $5) plus $0.05 per share. Partial dividend reinvestment is available. Selling fees are $15 for a batch sale and $25 for a market-order or limit-order sale plus $0.12 per share. The plan administrator is Computershare. For enrollment information call (866) 478-8569 or visit www.computershare.com.
Charles A. Carlson, CFA, DRIP Investor, www.dripinvestor.com, 800-233-5922, November 2017