2 Specialty Chemical Stocks Rated Strong Buy


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The chemicals industry lies at the center of the production, manufacturing, and industrial boom worldwide. The industry faced the heat from a significant downturn in demand last year in the wake of the COVID-19 pandemic. The contagion brought global industrial activities to a grinding halt due to the unprecedented manufacturing shutdowns, leading to a slump in demand for chemicals in key major markets, including automotive, construction, and electronics. Additionally, the industry faced major headwinds from the short supply of raw materials as a result of the crisis.

However, a strong recovery in the chemicals industry is underway as reflected by the recent upbeat manufacturing data from the United States. Deloitte believes chemical industry revenues will grow about 8% in 2021, after facing a decline of 9% in 2020. In fact, the domestic manufacturing sector has already started gaining strength.

Given this favorable backdrop, RPM International Inc. (RPM - Get Rating) and NewMarket Corp (NEU - Get Rating) are well-positioned to deliver solid returns this year on the back of their durable businesses as well as progressive management.

RPM International Inc. (RPM - Get Rating)

RPM manufactures and sells specialty chemicals for the industrial, specialty, and consumer markets worldwide. The company is a world leader in specialty coatings, sealants, building materials, and related services. RPM has a diverse portfolio with hundreds of market-leading brands that operates across four segments – consumer, construction products, performance coatings, and specialty products.

On February 9, 2021, RPM received notification of an unsolicited mini-tender offer by TRC Capital Investment Corporation to purchase up to 1.5 million shares, or about 1.15%, of RPM’s outstanding common stock. RPM recommended that stockholders rejected the tender offer. The company does not endorse the same because it was underpriced and that the offer did not provide investors with the same level of protections provided for larger tender offers under US federal securities laws.

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