Best Chemical Stocks for Value Investors in 2019: Five Opportunities Worth Exploring

The chemical sector continues to present compelling investment opportunities for those seeking value in an otherwise richly valued market. Despite being near all-time highs, leading chemical companies are trading at notably reasonable multiples—many in the mid-teens or lower—relative to both earnings and free cash flow. This valuation advantage comes with important caveats worth understanding before investing.

Chemical stocks are inherently cyclical, particularly specialty manufacturers with concentrated portfolios or significant exposure to volatile commodity inputs like oil. Earnings in the sector rarely follow smooth upward trajectories; instead, volatility and inconsistency are standard features that deter many investors. Yet current conditions suggest potential reward for patient capital: the economy remains resilient, commodity prices are reasonably stable, and valuations offer genuine attraction. Here are five best chemical stocks that warrant consideration, each presenting distinct investment theses.

DowDuPont: Global Leader Trading at a Discount

DowDuPont (NYSE: DWDP) stands as the world’s largest chemical company by sales, yet the market has overlooked its value potential. The stock trades at just 14.5x forward earnings despite the company’s commanding market position and ongoing restructuring efforts designed to unlock hidden value.

The company is executing an ambitious three-way spin-off that will create a specialty products-focused business to be rebranded as DuPont. This transformation, while creating near-term uncertainty that may be depressing the share price, positions the company for significant value creation. Wall Street analysts recognize this opportunity, with the consensus price target of $44 implying approximately 43% upside potential. Including the company’s 3%+ dividend yield, the total return opportunity approaches 46%, making DWDP a compelling holding for value-oriented investors.

Albemarle: Growth Engine in Electric Vehicle Revolution

Albemarle (NYSE: ALB), the world’s leading lithium producer, offers indirect exposure to the accelerating shift toward electric vehicles championed by companies like Tesla (NASDAQ: TSLA). As the essential material in EV battery technology, lithium demand should benefit from years of expansion as global transportation electrifies.

Recent performance has been disappointing, with the stock down roughly one-third over the past 12 months. Concerns about potential oversupply and competitive pressure from Sociedad Quimica y Minera de Chile (NYSE: SQM), which has targeted market share gains, have weighed on sentiment. However, the selloff appears excessive relative to the long-term growth trajectory. Trading at a forward P/E of just ten, Albemarle presents rational valuation even amid cyclical headwinds. Additionally, management’s aggressive $500 million share repurchase program demonstrates confidence and should provide meaningful returns alongside business growth. For investors seeking a more stable play on electric vehicle adoption than Tesla itself, Albemarle merits attention.

W.R. Grace: Patient Capital Finds Value

W.R. Grace (NYSE: GRA) has essentially treaded water for several years despite solid operational execution. A spin-off and restructuring involving Sealed Air (NYSE: SE) failed to reignite investor enthusiasm, and even consistent earnings beats—seven consecutive quarters of topping both revenue and profit estimates—haven’t moved the stock appreciably.

This apparent indifference to positive fundamentals has paradoxically created opportunity. The forward P/E multiple has compressed below 15x, now trading in line with the broader sector average. The company’s exposure to gasoline demand through its fluid catalytic cracking (FCC) business does present a headwind for those bullish on rapid electric vehicle penetration. Nevertheless, W.R. Grace combines conservative valuation with professional management and operational excellence. Past disappointment for shareholders may well reverse as the market recognizes the company’s genuine strengths and revalues the stock accordingly.

H.B. Fuller: Acquisition-Driven Adhesives Specialist

H.B. Fuller (NYSE: FUL) has already appreciated approximately 30% from 2015 lows, but meaningful additional upside appears realistic. The company leads the global adhesives market, competing directly with heavyweights like 3M and Germany’s Henkel (OTCMKTS: HENKY), along with numerous smaller rivals.

Fuller’s 2017 acquisition of Royal Adhesives materially strengthened its market position and boosted profitability by nearly 50% through integration synergies. Management has articulated ambitious medium-term growth targets supported by further acquisition opportunities, cost optimization initiatives, and strategic migration toward higher-margin, value-added product offerings. Achieving these targets—or coming close—could reasonably support double-digit annual returns. The adhesives business itself remains less cyclical than many chemical end markets, providing durable demand and recurring opportunities for market share consolidation. At approximately 11x EBITDA and 17x earnings, a substantial portion of Fuller’s growth potential remains unpriced into the current valuation.

Tronox: High-Risk Chemical Stock Play

Tronox (NYSE: TROX) demands a high risk tolerance, as evidenced by its volatile multi-year price action. The stock traded above $35 in 2012, collapsed below $5 in early 2016, subsequently recovered to $27, and currently trades below $11.

This gyration primarily reflects the company’s dependence on titanium dioxide (TiO2) pigment, a material used extensively in paints, plastics, and industrial applications. TiO2 pricing is notoriously unpredictable, creating corresponding swings in TROX earnings. Compounding the volatility are meaningful debt levels, ongoing mergers and acquisitions (including recent business dispositions and pending acquisitions), and mining operations. Despite these challenges—or perhaps because of them—the stock currently trades at just five times next year’s projected earnings, an extraordinarily compressed multiple that may offer opportunity for patient, risk-tolerant investors.

A path to recovery exists if the company can stabilize operations and the TiO2 market achieves greater predictability. For those with appropriate risk appetite and a multi-year investment horizon, Tronox represents a high-risk, high-reward chemical stock opportunity.

Final Thoughts on Best Chemical Stocks

In aggregate, these five chemical stocks represent distinct pathways to attractive risk-adjusted returns for investors comfortable with cyclical exposure. The sector’s current valuation, combined with reasonable macroeconomic conditions and stable input costs, creates a compelling window for disciplined capital allocation in quality chemical companies.