Stocks part of the “Materials” sector — sometimes “Production/Manufacturing” — aren’t challenging to identify. They are best defined as businesses that create and distribute the goods and services needed to foster successful operations in all other active markets. The extraction of raw materials, such as mining precious metals, is a perfect example. Another good example would be a chemical production company. The sector does not, however, as you might otherwise suspect, comprise any firms involved in fossil fuels, such as coal, oil, and natural gas, as they are instead considered part of the energy industry.
Also included in Materials and within the S&P 500 are equipment suppliers, painters, PVC pipe-layers, and many more involved in construction tools and accessories. Stocks in paper and packaging materials like cartons and containers are featured, the “material” itself ranging from cardboard to plastic. Finally, precious metal miners who keep busy extracting minerals from the earth are among the most profitable in the sector. At any given time — as with most Materials stocks — they can offer dividends and healthy returns while also retaining affordable share prices. They can take off rather suddenly if, for instance, a construction warehouse were to benefit from implementing groundbreaking A.I. tech, an industry that similarly serves the broader market. Materials, though, have been around longer, they pay dividends, and can be counted on to deliver consistent, tangible resources per the market’s needs.
Now that we know what kinds of companies we’re talking about, I’ve focused our eye on three tickers that, thanks to their impressive performance, have each earned the endorsement of a number of analysts who mark these tickers with buy ratings. Join me while I break them down:
Myers Industries Inc (MYE)
Myers Industries, Inc. (MYE) manufactures and distributes various forms of equipment globally. Distribution and Material Handling are MYE’s two business segments. The Material Handling division makes sturdy plastic reusable containers for MYE to distribute. Pallets, boxes, bulk shipping containers, storage and organizing items, plastic products, consumer fuel containers, and water, fuel, and waste tanks are among MYE’s primary products. MYE‘s Distribution segment distributes and manufactures tire repair materials and specialty rubber products for passenger, heavy truck, and off-road vehicles. Retail stores, business fleets, truck stops, auto dealers, general repair and maintenance shops, and government entities utilize what MYE offers. MYE was founded in 1933; it’s headquartered in Akron, OH.
MYE has been building in notoriety on Wall Street, and its performance is impressive enough to make it a clear picture. Down roughly 6.8% year-to-date, MYE reports trailing twelve-month revenue of just shy of $900 million; what’s cool about this is that the firm’s market cap is considerably less at a modest $754 billion. MYE has forecasted sales of $229.6 million, with an EPS of 36 cents per share. MYE has a P/E ratio of 12.6x, and is showing 5-year EPS growth of +21.14%. MYE has the distinction of beating analysts’ earnings predictions for the last four consecutive fiscal quarters of 2022 and Q4 2021. MYE’s dividend yield is 2.61%, with a quarterly payout of 14 cents ($0.54/yr) per share. Analysts who offer 12-month price estimates have marked MYE with a median price target of $25.38, with a high of $27 and a low of $23.75. While a narrow range, MYE is only poised to move up, as its average target would bring a 22.6% gain over current pricing. Analysts also concede on MYE’s buy rating.
International Flavors & Fragrances Inc (IFF)
International Flavors & Fragrances Inc. (IFF) is a creator and manufacturer of food and drink, health and biosciences, scent and pharma solutions, and adjacent complementary products. IFF’s business segments include Nourish, Health & Biosciences, Scent, and Pharma Solutions. IFF’s Nourish segment comprises various ingredients, flavor profiles, and food designs. IFF’s Health & Biosciences contains health, cultures, food enzymes, home and personal care, animal nutrition, and grain processing. Through its Pharma Solutions segment, IFF produces a portfolio that includes cellulosic and seaweed-based pharmaceutical additives to improve the functionality and delivery of a given medication’s chemical compounds. IFF was founded in 1953 in New York, NY, where its headquarters are also located.
IFF is another company performing well despite optics which might turn an investor away too quickly. IFF’s stock is undoubtedly on a dip, yet it’s still surpassing the Street’s expectations. Down by -12.40% year-to-date and near the bottom of its 52-week low, this could be an attractive opportunity to capitalize. IFF shows roughly $3 billion in sales for the current quarter, with a 58 cents per share EPS. IFF boasts a comparatively sizeable market cap of $23.41 billion, held by a solid P/E of 16.9x. With a volatility-safe beta figure of 1.10, IFF has handily brought in upwards of $13 billion; IFF currently has a dividend yield of 3.53% and a quarterly shareholder payout of 81 cents ($3.24/yr) per share. Analysts have given IFF an average price target of $110, with a high of $145 and a low of $82. If IFF’s updated price falls between the median and high marks, that represents a potential increase of 20 to 58%. As with its peers above, IFF is in a great position; Analysts say buy now.
Vale SA (VALE)
The famous Brazilian metal and mining conglomerate Vale SA (VALE) focuses on extracting and mainly processing iron ore, nickel, and silver. Iron ore pellets, copper, PGMs (platinum group metals), gold, and cobalt are among other mined products offered by the firm. VALE runs transportation infrastructure throughout its native Brazil and other parts of the globe, including servicing railways, marine terminals, and ports, all linked with its mining activities. VALE is involved in greenfield mineral exploration in five nations, locating new mining sites. VALE currently maintains warehouses all around the globe to facilitate its shipping of metals. VALE‘s international mining activities represent over 30 countries. Founded on June 1st, 1942, by Getulio Vargas, VALE is headquartered in Rio de Janeiro, Brazil.
VALE is a personal favorite, and I was pleased to check in and see how well it’s been doing since it started to pick up momentum in 2021 and then again in 2022. I’ve admired its willingness to take advantage of the metrics that free up expenditures VALE puts to work. VALE has an impressive market cap of nearly $80 billion and, over the last twelve months, has brought in $43.5 billion in revenue, with a profit margin of $45.17%, an attractive beta score of 0.90 — indicating safety from market volatility — and a P/E ratio of 4.76x, with a forward P/E of 6.90x and a 3-5 year EPS growth rate of 52.2%. VALE has also enjoyed cleaning up during earnings seasons, as the stock most recently beat analysts’ on EPS and Revenue by surprise margins of 18.5% and 4.90%, respectively. VALE offers an attractive dividend yield of 8.79%, with a quarterly payout of 37 cents ($1.48/yr) per share. Analysts who concede on yearly pricing estimates give VALE a median price target of $18.50, with a high of $25.50 and a low of $12. It looks promising that VALE will hit anywhere from its median to high mark, and if it does so, it would create a 53% gain over its latest price, and with all it has going for it, now is an opportune time for investors to lend their strong consideration. It looks like we’d be wise to buy and hold VALE now.
Remember that these stocks each have an impressive trailing twelve-month (TTM) P/E ratio. I wondered how they would compare to the overall S&P 500, the idea being to give clear data-based perspective on one of the biggest strengths a stock can display:
MYE: 12.6x
IFF: 16.9x
VALE: 4.76x
S&P 500 Index: 29x
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