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 underperformed the broader market. The XLB’s total return was 23.9% over the past 12 months, below the Russell 1000’s total return of 35.2%. These market performance numbers and all statistics in the tables below are as of Sept. 17, 2021.
Here are the top three 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)||148.91||16.6||6.8|
|DuPont de Nemours Inc. (DD)||68.91||36.0||6.9|
|LyondellBasell Industries NV (LYB)||92.15||30.8||7.6|
- Celanese Corp.: Celanese is a global producer of chemicals and advanced materials. It produces acetyl, acetate, vinyl emulsion, and engineered polymers.
- DuPont de Nemours Inc.: DuPont de Nemours produces construction materials, fabrics, electronics, medical devices, resins, and adhesives for the energy, automotive, and other industries. For its Q2 2021, ended June 30, DuPont reported net income of $487 million versus net loss in the prior-year quarter on 25.7% YOY net sales growth. The company cited strong performance in several end-markets, including semiconductors, smartphones, automotive, and residential construction, as a key factor in its performance.
- LyondellBasell Industries NV: LyondellBasell Industries makes petrochemical products that are used in a wide range of industries, including in the manufacturing of personal care products, lightweight plastics, food packaging, automotive components, medical applications, biofuels, and more. In late August, the company announced the upcoming retirement of CEO Bhavesh V. (Bob) Patel on Dec. 31, 2021. At that time, Patel will also step down from the company’s Board of Directors. LyondellBasell did not name a successor in the press release.
These are the top materials stocks as ranked by a growth model that scores companies based on a 50/50 weighting of their most recent quarterly year-over-year (YOY) percentage revenue growth, and their most recent quarterly YOY earnings-per-share (EPS) growth. Both sales and earnings are critical factors in the success of a company. Therefore ranking companies by only one growth metric makes a ranking susceptible to the accounting anomalies of that quarter (such as changes in tax law or restructuring costs) that may make one or the other figure unrepresentative of the business in general. Companies with quarterly EPS or revenue growth of over 2,500% were excluded as outliers.
|Fastest-Growing Materials Stocks|
|Price ($)||Market Cap ($B)||EPS Growth (%)||Revenue Growth (%)|
|Freeport-McMoRan Inc. (FCX)||33.05||48.5||2,330||88.2|
|Nucor Corp. (NUE)||104.89||30.8||1,300||103.1|
|Steel Dynamics Inc. (STLD)||61.95||12.6||822.2||113.2|
- 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.
- Nucor Corp.: Nucor is a maker of carbon and alloy steel, steel deck, steel bearing products, and cold finished steel. The company also acts as a broker of various types of metals. On Sept. 20, the company announced its plans to build a $2.7 billion state-of-the-art sheet mill with a capacity of three million tons per year. Nucor is considering locations in Ohio, Pennsylvania, and West Virginia for the mill, which will serve customers in the Midwest and Northeast.
- Steel Dynamics Inc.: Steel Dynamics is a carbon-steel producer and metals recycler. The company offers products including flat-rolled steel sheet, structural beams, and engineered bar special-bar-quality. For the company’s Q2 2021 ended June 30, Steel Dynamics reported dramatic growth YOY in both operating income and net income attributable to the company. The growth was driven by record operating income in the company’s Steel Operations business and record shipments in its Steel Fabrication Operations.
These are the materials stocks that had the highest total return over the past 12 months.
|Materials Stocks With the Most Momentum|
|Price ($)||Market Cap ($B)||12-Month Trailing Total Return (%)|
|Olin Corp. (OLN)||48.49||7.8||301.8|
|Alcoa Corp. (AA)||48.83||9.1||263.0|
|Cleveland-Cliffs Inc. (CLF)||21.86||10.9||227.2|
|Materials Select Sector SPDR ETF (XLB)||N/A||N/A||23.9|
- 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.
- Alcoa Corp.: Alcoa is a leading producer of aluminum, bauxite, and alumina products. The company serves customers in the aluminum industry around the world. On Sept. 20, Alcoa announced plans to restart its Alumar smelter in Sao Luis, Brazil, previously curtailed since 2015. The smelter will be powered with 100% renewable energy and will have an aluminum production capacity of 268,000 metric tons per year.
- Cleveland-Cliffs Inc.: Cleveland-Cliffs is a major North American flat-rolled steel producer and supplier of iron ore pellets.
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YCharts. “Financial Data.” Accessed Sept. 21, 2021.
DuPont de Nemours Inc. “DuPont Reports Second Quarter 2021 Results.” Accessed Sept. 21, 2021.
LyondellBasell Industries NV. “LyondellBasell Announces Retirement of Chief Executive Officer.” Accessed Sept. 21, 2021.
Nucor Corp. “Nucor to Build State-of-the-Art Sheet Mill.” Accessed Sept. 21, 2021.
Steel Dynamics Inc. “Second Quarter 2021 Investor Call Presentation,” Pages 4-5. Accessed Sept. 21, 2021.
Alcoa Corp. “Alcoa Plans Restart of Aluminum Smelting Capacity at Alumar in Brazil.” Accessed Sept. 21, 2021.