Zacks Investment Ideas Feature Highlights: Kronos Worldwide, PPG Industries, Olin Corp and Huntsman

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Apr 20, 2011, 10:00 ET

CHICAGO, April 20, 2011 /PRNewswire/ -- Today, Zacks Investment Ideas feature highlights Features: Kronos Worldwide Inc. (NYSE: KRO), PPG Industries (NYSE: PPG), Olin Corp (NYSE: OLN) and Huntsman (NYSE: HUN).

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4 Under-the-Radar Stocks Set to Soar

While metals and ag may grab all the headlines, one major sector component that often gets overshadowed is the chemicals industry.

The chemicals industry is an integral part of the global economy, converting raw materials into more than 70,000 different products. Just like metals and agriculture, chemicals have benefited from surging global demand, which has led to rising prices and record profits.

There are several chemical stocks with enormous growth projections and reasonable valuations.

Here are 4 set to soar in 2011:

Kronos Worldwide Inc. (NYSE: KRO) manufactures titanium oxide pigments. TiO2 is a fine white powder used in products like paints, plastics and paper to give them maximum whiteness and opacity.

The company reported excellent fourth quarter results in March. Revenue jumped 24% year-over-year to $373.3 million on higher prices and volumes in all markets for TiO2. EPS came in at 66 cents, 3 cents ahead of the Zacks Consensus Estimate. This was up from 11 cents in the same quarter in 2009.

Estimates have been soaring off the strong quarter, sending the stock to a Zacks #1 Rank (Strong Buy). The Zacks Consensus Estimate for 2011 is $4.37, up from $3.48 sixty days ago. This represents 131% growth over 2010 EPS.

Despite the remarkable growth prospects, shares trade at just 13.3x forward earnings, a discount to the industry average of 14.8x. Its PEG ratio is an attractive 0.7.

PPG Industries (NYSE: PPG) is the world's leading coatings and specialty products company. It provides products for the construction, consumer products, industrial and transportation markets and aftermarkets. The company was founded in 1883 and is headquartered in Pittsburgh.

Estimates have been steadily rising as the company has delivered an impressive 11 consecutive positive earnings surprises. The Zacks Consensus Estimate for 2011 is currently $6.35, representing 22% EPS growth over 2010.

Valuation is reasonable with shares trading at 14.6x forward earnings, a slight discount to the industry average. The company also pays a dividend that yields 2.4%. It has paid a remarkable 450 consecutive dividend payments dating back to 1899.

It reports its results for the first quarter on April 21. PPG is a Zacks #1 Rank (Strong Buy) stock.

Olin Corp (NYSE: OLN) operates in two business segments: Chlor Alkali and Winchester.

The Chlor Alkali division manufactures chlorine and caustic soda, sodium hydrosulfite, hydrochloric acid, hydrogen, potassium hydroxide and bleach products. The Winchester division, which accounts for about one-third of total revenue, makes ammunition.

Estimates have been soaring since the company reported Q4 EPS of 45 cents, crushing the Zacks Consensus Estimate of 5 cents. Olin's results were driven by better than expected volumes and pricing in both segments.

Although shares jumped on the Q4 earnings beat, valuation is still attractive for this Zacks #1 Rank (Strong Buy) stock. Shares trade at 14.7x forward earnings, in-line with its peers, but its PEG ratio is only 0.67.

Like PPG, Olin Corp has been around since the 19th century. It was founded in 1892 and is based in Clayton, Missouri. The company has paid 337 consecutive quarterly dividends. It yields 3.2%.

Huntsman (NYSE: HUN) manufactures differentiated chemicals for a myriad of industries around the globe. Approximately 39% of revenues come from polyurethanes.

The company has strung together three consecutive positive earnings surprises, including a 26% beat in the fourth quarter of 2010. Revenues for the quarter jumped 17% year-over-year as each segment saw higher average selling prices and most saw volume increases.

Estimates have been rising off the strong quarter, sending the stock to a Zacks #1 Rank (Strong Buy). The 2011 Zacks Consensus Estimate is $1.41, representing 69% growth over 2010 EPS.

The 2012 consensus estimate has also been rising. It currently stands at $1.79, corresponding to 27% EPS growth.

Shares trade at just 13.6x forward earnings, a discount to the industry average of 14.8x. It pays a dividend that yields 2.0%.

Conclusion

When you come across headlines touting soaring metal and agriculture prices, remember that the chemicals industry is booming too. These 4 stocks all have rising estimates, attractive valuations and are expected to see exceptional earnings growth in 2011.

Keep in mind, however, that the industry is heavily dependent on global economic conditions, and a downturn in economic activity would send these stocks plummeting.

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