The U.S. chemical industry made a strong recovery from the pandemic-era lows since last year, driven by growing demand from major end markets, including construction, healthcare, electronics, automotive, manufacturing, etc. This trend will likely continue this year, as the sustained demand for commodity and specialty chemicals is expected to keep the prices booming throughout the year.
Furthermore, the industry should witness increased capital expenditures as leading companies focus on building capacity and expanding into end markets. According to a report by Industry Research, the global specialty chemicals market is projected to reach $644.50 billion in 2022 and $769.56 billion by 2028, growing at a CAGR of 3%.
Given the promising industry growth prospects, chemical stocks LSB Industries, Inc. (LXU) and Lightwave Logic, Inc. (LWLG) have surged 300% over the past year. So, it could be worth watching these stocks.
LSB Industries, Inc. (LXU)
LXU manufactures, markets, and sells chemical products to customers in the U.S., Mexico, and Canada. For various applications, the company offers nitrogen-based fertilizers, high purity ammonia, carbon dioxide, mixed nitrating acids, and diesel exhaust fluids. In addition, it provides industrial-grade ammonium nitrate and HDAN solutions. It serves the agricultural, industrial, and mining markets.
On March 08, LXU completed its private offering of $200 million in aggregate principal amount of its 6.25% senior secured notes due 2028. The net proceeds from the note offering might be used to pursue strategic acquisition opportunities and organic fund growth, including increasing production capacity and other corporate purposes.
In the fiscal 2021 fourth quarter ended December 31, 2021, LXU's net sales increased 114% year-over-year to $190.23 million, and its gross profit improved 2,364.5% year-over-year to $78.46 million. The company's operating income grew 781.2% year-over-year to $69.69 million. LXU’s adjusted net income and adjusted EPS came in at $65.01 million and $0.72, respectively, registering an increase of 452.7% and 256.9% from the prior-year period.
The consensus revenue estimate of $266.99 million for the fiscal 2022 second quarter ending June 2022 represents 89.8% growth from the same period in 2021. The consensus EPS estimate of $1.18 for the ongoing quarter indicates a 265.2% year-over-year rise. The company has an impressive earnings surprise history as it has surpassed the consensus EPS estimates in each of the trailing four quarters.
Shares of LXU increased 99.7% year-to-date and 337.8% over the past year. It closed Friday's trading session at $22.37.
Lightwave Logic, Inc. (LWLG)
LWLG is a development stage company that focuses on developing photonic devices and optical polymer material systems for data communications and optical computing markets in the U.S. The company offers electro-optic modulators, polymer photonic integrated circuits, organic chromophores in electro-optic polymer systems, and photonic device designs.
This April, LWLG announced the publication of a U.S. patent application on new hybrid photonics. “This is another important addition to our IP portfolio that allows our polymer technology platform to become the engine for pluggable fiber optic transceivers that are being utilized throughout internet infrastructure. You need simplicity and efficiency in chip design for foundries, and this patent application serves that purpose acutely,” stated Dr.Michael Lebby, CEO of LWLG.
In March, LWLG secured a new U.S. patent to simplify modulator integration for high-volume foundry manufacturing operations. This invention facilitates improved polymer modulator performance, allowing higher internet traffic and decreased power consumption. It is expected to expand the company’s customer reach and boost revenues.
The company's cash and cash equivalents rose 608.7% year-over-year to $23.43 million for fiscal 2021 (ended December 31). Its total current assets increased 510.9% from the prior year to $23.66 million. In addition, its cash inflow from financing activities rose 407.6% from the last year to $31.28 million.
The stock improved 9.9% over the past six months and 522.9% over the past year. It closed Friday's trading session at $10.90.
LXU shares were trading at $21.23 per share on Monday afternoon, down $1.14 (-5.10%). Year-to-date, LXU has gained 92.13%, versus a -9.50% rise in the benchmark S&P 500 index during the same period.
About the Author: Mangeet Kaur Bouns
Mangeet’s keen interest in the stock market led her to become an investment researcher and financial journalist. Using her fundamental approach to analyzing stocks, Mangeet’s looks to help retail investors understand the underlying factors before making investment decisions.
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