Kalkine Media lists 5 material stocks to watch in December

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 Kalkine Media lists 5 material stocks to watch in December
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  • Net sales of Corteva, Inc. (CTVA) rose 17 per cent YoY in Q3 FY22.
  • FMC Corporation's (FMC) revenue jumped 15 per cent YoY in the latest quarter.
  • Air Products and Chemicals raised its quarterly dividend by eight per cent.

The material sector is comprised of organizations that engage in discovering, developing, and processing raw materials. The company products are widely used in the sectors like steelmaking, farming, agriculture, fishing, construction, etc.

Investors typically explore opportunities in the material sector, given the robust demand for their products and services in almost every sector. Materials, including metals, chemicals, etc., are necessities in nearly every industry.

In addition, traders might be keeping close track of metals and other commodities in recent days, especially after the Russia-Ukraine war. The war has bumped up the prices of some material stocks in recent months.

However, some commodities, like lumber, cotton, etc., have also witnessed a slump in their prices in recent months amid macroeconomic headwinds like soaring inflation, and the Fed's aggressive stance with their monetary policy.

But, the material sector is highly cyclical, meaning its performance is closely tied to economic health. So, the sector generally gets a hit during economic turmoil and vice-versa.

The material firms also include some firms that specialize in mining activities of precious metals, which some investors traditionally consider as hedge portfolio, that maintains a steady momentum during times of market uncertainties.

Meanwhile, today we will be exploring about five material stocks, which include CF Industries Holdings, Inc. (NYSE: CF), Corteva, Inc. (NYSE: CTVA), FMC Corporation (NYSE: FMC), Air Products and Chemicals, Inc. (NYSE: APD), and Mosaic Company (NYSE: MOS), and their recent stock and financial performance.

CF Industries Holdings, Inc. (NYSE: CF)

The leading agricultural fertilizer distributor, CF Industries Holdings had a dividend yield of 1.47 per cent. The company's stock, which manufactures and distributes nitrogenous fertilizers like ammonia, urea, etc., surged 47 per cent YTD and about 66 per cent YoY.

In the ongoing quarter through November 28, the CF stock has added over eight per cent, and at its closing price of Monday, it was down over 12 per cent from its 52-week high of US$ 119.5983 noted on August 26, 2022.

CF Industries Holdings' net sales totalled US$ 2.32 billion in Q3 FY22, and its shareholders' net income totalled US$ 438 million. In Q3 FY21, the leading hydrogen and nitrogen products manufacturer's net loss was US$ 185 million on net sales of US$ 1.36 billion.

For the first nine months of fiscal 2022, the distributor of agricultural fertilizer's net sales was US$ 8.57 billion, and its income was US$ 2.38 billion, against an income of US$ 212 million on net sales of US$ 3.99 billion in the year-ago period.

Corteva, Inc. (NYSE: CTVA)

The agricultural chemical and seed company, Corteva Inc's dividend yield was 0.9 per cent. The stock of the pure-play agricultural firm noted a jump of 37 per cent year-to-date and over 38 per cent year-over-year.

Meanwhile, in the running quarter, the CTVA stock rose over 13 per cent through Monday, November 28, and touched its 52-week high of US$ 68.43 on November 2, 2022.

Corteva Inc's net sales grew 17 per cent YoY to US$ 2.78 billion in Q3 FY22, while its YTD net sales surged 12 per cent YoY to US$ 13.63 billion. The agricultural chemical provider's GAAP EPS dropped by 23 per cent YoY to US$ 1.72 apiece in the first nine months of 2022.

Meanwhile, the Indianapolis, Indiana-based firm has affirmed its fiscal 2022 net sales guidance range between US$ 17.2 billion and US$ 17.5 billion.

FMC Corporation (NYSE: FMC)

The major American chemical manufacturing firm, FMC Corporation, holds a dividend yield of 1.64 per cent. The company's stock, which primarily focuses on the food production system globally, rose 15 per cent YTD and close to 24 per cent YoY.

In the running quarter, the FMC stock gained about 20 per cent, with its close at US$ 127.04 on Monday, November 28. Meanwhile, its closing price of Monday was down nearly 10 per cent from its 52-week high of US$ 140.99 noted on April 20 this year.

FMC Corporation's revenue grew 15 per cent YoY to US$ 1.38 billion in Q3 FY22, while its net income plunged 27 per cent YoY to US$ 118 million on a GAAP basis.

Air Products and Chemicals, Inc. (NYSE: APD)

The chemical industry firm, Air Products, and Chemicals primarily sells gases and chemicals, and its dividend yield is 2.09 per cent.

The company, which offers essential industrial gases, equipment, and other related solutions, noted a growth of about one per cent YTD and about three per cent YoY in its stock price.

In the running quarter, the APD stock soared about 31 per cent through Monday, November 28, and touched its 52-week high of US$ 311.13 on November 25, 2022.

Air Products and Chemicals' GAAP EPS rose two per cent YoY to US$ 2.56 apiece in Q4 FY22, while its annual EPS surged 11 per cent YoY to US$ 10.08 per share.

The company has raised its quarterly dividend by eight per cent to US$ 1.62 apiece, marking its 40th straight year of increases. The dividend would be payable on February 13, 2023.

Mosaic Company (NYSE: MOS)

Another major American agriculture firm, Mosaic Company's dividend yield was 1.16 per cent. The firm's stock, which mines phosphate, potash, and collects urea, rose by nearly 28 per cent YTD and about 42 per cent YoY.

In Q3 FY22, Mosaic Company's net income totaled US$ 841.7 million on net sales of US$ 5.34 billion, against an income of US$ 371.9 million on net sales of US$ 3.41 billion in Q3 FY21.

Stock performance of five US material stocksSource: ©Kalkine Media®; © Canva Creative Studio via Canva.com

Bottom line:

Due to its cyclical nature, the material sector was among the most affected sectors during the COVID-19 pandemic. However, as the economy started to come out of the economic downturn after the pandemic, the investors saw some hope in the sector. The governments increased their spending in the infrastructure and construction segment.

The increasing spending on the economic foundation has resulted in higher material demands. But the optimism didn't last long, as the global economy went through unprecedented pressures in recent days due to geopolitical turmoil and other market turmoils.

The US economy slumped for the starting two quarters of the year, which also left the investors cold while spurring fears over a potential recession. But the recent data for the third quarter, came in positive while raising the hopes of some market participants.

Meanwhile, the S&P 500 material index fell about six per cent in the trailing 12 months, and close to 11 per cent in 2022, due to elevated inflation, increasing policy rates, etc.

So, keeping the uncertainties in mind, investors should analyze the assets thoroughly before investing, as these might keep the market jittery in the coming days.


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