Cabot Corporation’s ( CBT Quick Quote CBT - Free Report) stock looks promising at the moment. It is benefiting from its growth actions and strong demand across regions and end markets. We are positive on the company’s prospects and believe that the time is right for you to add the stock to portfolio as it looks promising and is poised to carry the momentum ahead. Cabot currently carries a Zacks Rank #2 (Buy) and a VGM Score of A. Our research shows that stocks with a VGM Score of A or B, combined with a Zacks Rank #1 (Strong Buy) or 2, offer the best investment opportunities for investors. Let’s take a look into the factors that make this specialty chemicals and performance materials company an attractive choice for investors right now. An Outperformer
Shares of Cabot are up 30.3% over the past year against the 18.3% rise of its
industry. It has also outperformed the S&P 500’s roughly 28.6% rise over the same period.
Image Source: Zacks Investment Research Estimates Moving Up
Earnings estimate revisions have the greatest impact on stock prices. Over the past three months, the Zacks Consensus Estimate for Cabot for fiscal 2021 has increased around 0.4%. The consensus estimate for fiscal 2022 has also been revised 7.8% upward over the same time frame.
Solid Growth Prospects
The Zacks Consensus Estimate for earnings for the current fiscal for Cabot is currently pegged at $4.97, reflecting an expected year-over-year growth of 138.9%.
Superior Return on Equity (ROE)
ROE is a measure of a company’s efficiency in utilizing shareholder’s funds. ROE for the trailing 12-months for Cabot is 27.6%, above the industry’s level of 17.6%.
Growth Drivers in Place
Cabot should gain from a recovery in demand from the pandemic-led slowdown, its disciplined execution of operations and targeted growth initiatives. It saw strong results in the Reinforcement Materials and Performance Chemical segments in the third quarter of fiscal 2021. Higher volumes across all regions and key end markets, a strong pricing in Asia and a solid demand from automotive applications mainly led the upside. Moreover, targeted growth initiatives have brought in higher sales, including new adoptions at leading battery customers.
Cabot, in its third-quarter call, said that it expects continued demand strength across all its segments for the fiscal fourth quarter. It raised its guidance for adjusted earnings per share for fiscal 2021 to $4.85-$5.05 from the prior expectation of $4.70-$4.95. The company should also benefit from the acquisition of Shenzhen Sanshun Nano New Materials. The acquisition significantly bolsters the market position and formulation capabilities of Cabot in the high-growth batteries market, especially in China. The buyout is also expected to create opportunities to expand Cabot’s position in the rapidly growing energy storage market.
Stocks to Consider
Other top-ranked stocks worth considering in the basic materials space include
Nucor Corporation ( NUE Quick Quote NUE - Free Report) , Nutrien Ltd. ( NTR Quick Quote NTR - Free Report) and The Mosaic Company ( MOS Quick Quote MOS - Free Report) , each sporting a Zacks Rank #1. You can see . the complete list of today’s Zacks #1 Rank stocks here Nucor has a projected earnings growth rate of 534.4% for the current year. The company’s shares have surged around 107% in a year. Nutrien has an expected earnings growth rate of 177.8% for the current year. The stock has also rallied around 64% over a year.
Mosaic has a projected earnings growth rate of 471.8% for the current year. The company’s shares have shot up around 96% in a year.