In these moments of the market where volatility is returning to its territory, it is when good investment opportunities arise because there are good discounts in companies with incredible performance that we can take advantage of for the moments when they explode to the upside. This upside also includes materials stocks.
Within the materials industry, there are three companies that have very good financial results and are doing incredible, it is worth taking a look at them, analyzing them deeply, and taking advantage of adding them to our portfolio, here you have these three materials stocks to buy.
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Linde (NYSE:LIN) is a company specializing in industrial gases and air separation technology. In simple terms, they supply essential gases for a variety of applications, from healthcare to manufacturing.
Why should you consider this company for your investment portfolio? First, its financial performance is solid, with a 15% increase in adjusted earnings per share compared to the previous year, despite a slight decline in sales.
They also have a promising growth horizon, having raised their 2023 earnings forecast by 12% to 14%. But what really stands out is its commitment to sustainability. Linde is listed in the FTSE4Good index, which recognizes companies with strong sustainable practices. They have drastically reduced carbon emissions, both their own and those of their customers, and aim to achieve climate neutrality by 2050.
They are also expanding their presence in renewable energy, which not only benefits the planet but can also boost their margins in the long term. In addition, they are strategically acquiring air separation units in China and extending supply agreements for industrial gases, which strengthens their market position.
Sherwin-Williams (NYSE:SHW), known for its paints and coatings, is making waves in the industry. They manufacture and sell a wide variety of paint products, demonstrating their dedication to quality.
What sets them apart are their remarkable financial results. In the second quarter of 2023, they reached a major milestone, achieving $6.24 billion in sales, up 6.3% from the previous year. This growth extends to their U.S. and Canadian stores, with a remarkable 9.5% sales increase.
Its financial strength is truly impressive. Net income per share experienced a substantial 39% increase compared to the second quarter of 2022, and even after adjusting for certain factors, remained solid at 36.5%. This translates into substantial profitability.
They are also forward-looking, as seen in their increased guidance for 2023, which projects earnings between $8.46 and $8.86 per share, even after accounting for expenses. Adjusted earnings further raise this range to $9.30-9.70 per share.
In addition, they prioritize their shareholders by announcing a quarterly dividend of $0.605 per common share. All in all, it’s one of those materials stocks to consider.
Southern Copper (SCCO)
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Southern Copper Corporation (NYSE:SCCO) is a leading mining company in South America, known for its strength and steady growth in the production of copper and other metals. This makes it an excellent choice for investment in your portfolio.
In the second quarter of 2023, they posted an impressive net profit of $547.5 million, an increase of 26.6% compared to the previous year. This was due to a reduction in costs thanks to fewer copper concentrate purchases from third parties. In addition, its net income margin improved to 23.8%.
Growth prospects are exciting, with expansion plans in the second half of 2023, including a new zinc concentration plant and the Pilares project. This will boost copper, zinc, molybdenum, and silver production, supporting future sales.
Cash flow from operating activities also strengthened, up 75.3% in the first half of 2023. Although adjusted EBITDA declined slightly in that period, SCCO has maintained a solid EBITDA margin.
They are forecasting a 17% increase in their copper production in Peru this year, despite earlier protests. This demonstrates its resilience in the midst of political and social challenges.
As of this writing, Gabriel Osorio-Mazzilli did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
Gabriel Osorio is a former Goldman Sachs and Citigroup employee. He possesses discipline in bottom-up value investing and volatility-based long/short equities trading.
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