I don’t use Facebook a lot. I wasn’t even aware of its massive outage earlier this week until my wife texted me about it hours later.
My biggest draw to the social media platform is do-it-yourself videos.
I don’t even do any projects around the house. But I’m fascinated by what people create.
Projects like resin-based tables, where skilled craftsmen use liquid resin that dries and forms a study table.
I’ve seen people place Star Wars figures inside the resin … use different colors of resin to create elaborate designs … all sorts of cool things.
It got me thinking about what companies make these popular resins and what the market for plastics, polymers and resins is like now and in the future.
I used Adam O’Dell’s six-factor Green Zone Ratings system and spotted a leader in the development of polymers and resins used for a range of products.
We are “Strong Bullish” on this plastics stock, which means it is poised to outperform the broader market by at least three times over the next 12 months.
Investing in plastics production doesn’t sound exciting, but the trends within this industry can lead to big profits for investors who get in now.
Rich History of Polymers Will Lead to Strong Future
In 1907, Leo Baekeland developed the first synthetic polymer, Bakelite. He created the plastic as an alternative to shellac — which was used as an electric insulator.
Electricity use was expanding in the United States, and insulator demand grew by the day.
Since then, the use of plastics and polymers has exploded. The industry’s market value has risen significantly, and there’s no sign it’s slowing down.
In 2019, the market value of plastic compounds in the U.S. was $82.65 billion. Research indicates that value will jump nearly 30% to more than $105 billion by 2025.
Investors can find big profits in this growing trend.
A Plastics Stock to Buy: AdvanSix Inc.
AdvanSix Inc. (NYSE: ASIX) develops polymer resins in the U.S. and internationally.
The New Jersey-based company’s signature product — Nylon 6 — is a resin used to produce fibers, filaments, engineered plastics and films.
AdvanSix has also pioneered the use of caprolactam — a component of Nylon 6 — for:
- Polymer resins.
- Acetone used in adhesives, paints, coatings, solvents and herbicides.
The company’s total revenue in 2020 was $1.15 billion.
Its 2021 total revenue is expected to be $1.56 billion— a 35% rise from last year.
The company recently announced the development of resins and films created with 100% post-industrial recycled materials. This means AdvanSix’s sustainable resins can be used to create beverage and food packaging, carpets and even medical products.
ASIX Stock Jumps 200% Since October 2020
It’s been a good year for AdvanSix stock.
On Jan. 4, 2021, its stock was trading at $19.78 per share. Today, that price has surpassed $43 per share — a 117% jump in only nine months.
AdvanSix’s Stock Rating
Using Adam’s six-factor Green Zone Ratings system, AdvanSix Inc. scores a 98 overall. That means we are “Strong Bullish” on the stock and expect it to outperform the broader market by three times in the next 12 months.
AdvanSix stock rates in the green in five of our six factors:
- Value — The company’s price-to ratios (earnings, sales and cash flow) are all at least half the specialty and performance chemical industry — including a P/E ratio of 12.3 (compared to the industry average of 23.41). The company earns a 98 on value.
- Momentum — AdvanSix’s rise in stock price since January 2021 has met with little to no downward pressure — even during the recent market sell-off. The company earns an 89 on momentum.
- Quality — AdvanSix has positive returns on assets, equity and investment that blow the doors off industry averages. Its return on equity is 20.8% compared to the industry average of minus-0.09%. The company earns an 84 on quality.
- Volatility — The upward movement of AdvanSix’s stock price has come with slight bouts of sideways trading. It earns an 83 on this metric.
- Size — With a market cap of $1.1 billion, AdvanSix is a great size for stocks we rate. It earns a 65 in this metric.
The company earns a 60 on growth after a sluggish bout of sales and earnings in 2020 due to the COVID-19 pandemic forcing plant shutdowns. However, that trend is already reversing itself in 2021.
Bottom line: Plastics and polymers are used in millions of products worldwide.
And the plastics market is only getting bigger — even beyond making cool polymer resin tables.
Finding profits in plastics stocks means finding the right companies developing new uses for these chemical compounds.
AdvanSix Inc. is already a market leader and has developed sustainable polymers. It’s a plastics stock to look at for your portfolio.
Matt Clark, CMSA®
Research Analyst, Money & Markets
Matt Clark is the research analyst for Money & Markets. He is a certified Capital Markets & Securities Analyst with the Corporate Finance Institute and a contributor to Seeking Alpha. Prior to joining Money & Markets, he was a journalist and editor for 25 years, covering college sports, business and politics.