Chemicals are in the car you drive, the clothes you wear, and almost everything else. The global chemical industry is huge, with more than $6 trillion in total annual revenue. Any market of that size presents opportunities for investors. Here’s what you need to know about investing in chemical stocks.
Top chemical stocks to buy in 2024
Top chemical stocks to buy in 2024
There are quite a few large-cap companies in the chemical industry that attract significant attention from investors. However, there are also some smaller companies that offer plenty of upside potential. Here are five top chemical companies, including both large and small companies:
| Company | Valuation |
|---|---|
| Air Products & Chemicals (NYSE:APD) | $72.2 billion |
| Dow (NYSE:DOW) | $36.3 billion |
| DuPont (NYSE:DD) | $35.5 billion |
| Huntsman Corporation (NYSE:HUN) | $4 billion |
| Tronox Holdings (NYSE:TROX) | $2.1 billion |
Air Products & Chemicals
1. Air Products & Chemicals
Air Products & Chemicals sells chemicals and gases for industrial use. The company markets products used by customers in around 50 countries. These customers operate across a variety of industries, including electronics, food and beverages, manufacturing, metals, and refining.
The shift to clean energy should be a significant growth driver for Air Products & Chemicals over the next decade and beyond. The company already ranks as the largest supplier of hydrogen, which is being increasingly used as a fuel for buses, trucks, and other vehicles. It's also a leader in carbon capture and gasification -- a technology that converts coal, high-sulfur-content liquids, and natural gas into syngas that is used to make chemicals and fuel, as well as to produce energy.
The company's adjusted earnings per share have increased at a double-digit percentage annually since 2014. Air Products & Chemicals has increased its dividend for more than 40 consecutive years.
Dow
2. Dow
Founded in 1897, Dow is one of the oldest chemical companies in the world. The company's products include coatings, industrial intermediates (chemicals used by other industries), plastics, and silicones manufactured in 31 countries.
Although Dow's business was affected by the COVID-19 pandemic, its future prospects appear strong. The global economic rebound has helped boost automotive, electronics, housing, and industrial markets -- all of which are key consumers of Dow's products. Long-term increasing demand for renewable energy, electric and autonomous vehicles, and high-speed 5G networks should also help Dow continue to grow.
The company's dividend is another big plus. Dow's dividend yield has remained near or above 4% throughout most of the period since its spinoff from DowDuPont in 2019.
DuPont de Nemours
3. DuPont de Nemours
DuPont de Nemours is even older than Dow, with its establishment dating back to the early 1800s. The company's products are used by customers in multiple industries, including building and construction, electronics, healthcare, transportation, and worker safety.
Like Dow, DuPont has undergone a lot of changes. The current company was one of three divisions of DowDuPont that separated in the 2019 reorganization. In February 2021, DuPont spun off its nutrition and biosciences business, and the unit merged with International Flavors & Fragrances (IFF -0.5%).
DuPont completed the acquisition of Laird Performance Materials for $2.3 billion in July 2021. The transaction boosts the company's leadership position in supplying electronics materials for several markets, including artificial intelligence, autonomous vehicles, Internet of Things, and 5G networks. DuPont's materials are already widely used in smartphones, semiconductors, and OLED (organic light-emitting diode) displays.
The company sold the majority of its mobility and materials segment to Celanese (CE -0.92%) in 2022. It divested a majority stake in the Delrin polymer business in 2023.
More recently, Dupont acquired medical device company Donatelle Plastics in July 2024. This deal added Donatelle's injection molding manufacturing capabilities to the company's healthcare offerings.
Huntsman Corporation
4. Huntsman Corporation
Huntsman generates more than 60% of its total revenue by selling polyurethane products, including insulation and construction materials. It also makes chemicals and materials used in fuel, along with lubricant additives, adhesives, coatings, apparel, furnishings, and more.
The company claims 31% of the $8.2 billion North American spray polyurethane foam (SPF) insulation market. It's also a key player in the SPF markets in Asia and Europe but still has significant room for growth.
Like several other major chemical companies, Huntsman has completed several acquisitions and divestitures in recent years. Most recently, the company sold its textile effects division to Archroma in 2023.
Tronox Holdings
5. Tronox Holdings
Tronox is the world's top vertically integrated manufacturer of titanium dioxide pigment. The company has mining operations in Australia and South Africa and pigment facilities in several other countries. Its operations provide raw materials used to produce titanium dioxide pigments used in paints, paper, plastics, and other products.
This chemical stock is more of a turnaround play than the others on our list. Tronox's share price has fallen significantly in recent years. The company has reported occasional quarterly losses.
However, Tronox should be well positioned to grow over the long term. Demand for titanium dioxide should increase by a compound annual growth rate of 6.4% through 2033. The company also has opportunities to expand its position as a supplier of rare earth oxides used in the production of permanent magnets.
Close to 80% of the chemical industry focuses on producing polymers and plastics, linking it closely with the oil industry.
Related investing topics
The cyclical nature of the chemical industry
The cyclical nature of the chemical industry
The chemical industry is tightly linked with several other industries, especially the oil industry. Almost 80% of the chemical industry focuses on producing polymers and plastics, which typically are made from petrochemicals.
Many of these polymers and plastics manufactured by chemical companies are used by consumer goods companies. Automakers use plastic and polymers in building cars and trucks, and synthetic rubber is used in manufacturing tires.
Chemicals are also used to make fertilizers and other products for the agriculture industry, as well as ingredients for the food industry, paints, and other key building and construction products. They’re also critical in the development of many drugs.
Because of the close interconnections with so many other industries, the fortunes of the chemical industry are strongly correlated with the health of the overall economy. As a result, chemical stocks tend to be cyclical in nature. For long-term investors, though, buying and holding the stocks of high-quality chemical companies can pay off nicely.
FAQ
Investing in chemical stocks FAQ
Which are the best chemical stocks to buy?
Different chemical stocks could be more attractive to different investors based on their investment objectives and risk tolerances. However, top chemical stocks to consider include Air Products & Chemicals (NYSE:APD), Dow (NYSE:DOW), DuPont (NYSE:DD), Huntsman (NYSE:HUN), and Tronox Holdings (NYSE:TROX).
What are the five biggest chemical companies in the world?
What is the largest chemical company in the U.S.?
Ohio-based Sherwin-Williams (NYSE:SHW), which manufactures specialty chemicals including paints and coatings, ranks as the largest publicly traded chemical company in the U.S. based on market cap.
Are chemical stocks a good investment?
Chemical stocks can be a good investment for some investors, especially income investors since many chemical stocks offer attractive dividends. However, the chemical industry is cyclical and isn't growing as fast as some other industries. Chemical stocks, therefore, probably won't be ideal picks for risk-averse investors and growth investors.
