The materials sector includes companies engaged in the discovery, development, and processing of raw materials, which are used across many sectors and industries. Materials stocks include manufacturers of products as varied as plastic, fertilizer, paper, concrete, and metals. Some prominent names include DuPont de Nemours Inc. (DD), Dow Inc. (DOW), and Vulcan Materials Co. (VMC). Materials stocks, as represented by the Materials Select Sector SPDR ETF (XLB), have underperformed the broader market, providing investors with a total return of 4.1% compared to the S&P 500's total return of 8.9% over the past 12 months. These market performance numbers and the statistics in the tables below are as of May 27.
Here are the top 3 materials stocks with the best value, the fastest earnings growth, and the most momentum.
Best Value Materials Stocks
These are the materials stocks with the lowest 12-month trailing price-to-earnings (P/E) ratio. Because profits can be returned to shareholders in the form of dividends and buybacks, a low P/E ratio shows you’re paying less for each dollar of profit generated.
|Best Value Materials Stocks|
|Price ($)||Market Cap ($B)||12-Month Trailing P/E Ratio|
|LyondellBasell Industries N.V. (LYB)||67.72||22.6||8.6|
|Eastman Chemical Co. (EMN)||68.64||9.3||11.7|
|Newmont Corp. (NEM)||59.21||47.5||13.7|
- LyondellBasell Industries N.V.: LyondellBasell is a chemical company based in the Netherlands that refines and produces plastic resins and other chemicals. These are used in the manufacturing of lightweight plastics, construction materials, automotive components, durable textiles, and bio fuels. Amid the coronavirus pandemic, the company posted an 82% drop in net income on a 15% decline in revenue for Q1 2020, which ended 31 March 2020.
- Eastman Chemical Co.: Eastman Chemical produces industrial chemicals, fibers, plastics, and additives used by a wide range of industries. The company reported a 24% increase in net earnings as sales fell 6% due to lower selling prices in Q1 2020, which ended 31 March 2020. CEO Mark Costa said that the coronavirus pandemic had created "unprecedented challenges," and that the company had taken steps to boost cash flow and liquidity.
- Newmont Corp.: Newmont acquires and develops mineral properties. The company produces primarily gold, but also silver, copper, zinc, and lead. The company reported growth in both sales and net income of 43% and 592%, respectively, for Q1 2020, which ended 31 March 2020. Despite these gains, the company reminded shareholders that it had withdrawn its full-year guidance at the end of March due to the possibility that some production may be deferred until 2021 as a result of the COVID-19 pandemic.
Fastest Growing Materials Stocks
These are the materials stocks with the highest year-over-year (YOY) earnings per share (EPS) growth for the most recent quarter. Rising earnings show that a company’s business is growing and is generating more money that it can reinvest or return to shareholders.
|Fastest Growing Materials Stocks|
|Price ($)||Market Cap ($B)||EPS Growth (%)|
|Newmont Corp. (NEM)||59.21||47.5||537.5|
|Corteva Inc. (CTVA)||25.64||19.2||64.6|
|Sherwin-Williams Co. (SHW)||583.13||53.0||32.1|
- Newmont Corp.: See above for company description.
- Corteva Inc.: Corteva is a provider of agricultural products, including seeds and crop protection products, as well as software solutions and digital services. The company announced earlier this month the appointment of Sam Eathington, formerly the Chief Science Officer at The Climate Corporation, as Senior Vice President and Chief Technology Officer.
- Sherwin-Williams Co.: Sherwin-Williams develops, manufactures, and distributes paint, coatings, and related products. The company sells its products to professional, industrial, commercial, and retail customers. The company reported net income growth of 31% on revenue growth of 3% for Q1 2020, which ended 31 March 2020. Sherwin-Williams also revised downward its earnings guidance for the coming fiscal year due to the COVID-19 pandemic.
Materials Stocks with the Most Momentum
These are the materials stocks that had the highest total return over the last 12 months.
|Materials Stocks with the Most Momentum|
|Price ($)||Market Cap ($B)||12-Month Trailing Total Return (%)|
|Newmont Corp. (NEM)||59.21||47.5||88.1|
|Sherwin-Williams Co. (SHW)||583.13||53.0||36.6|
|FMC Corp. (FMC)||94.82||12.3||36.3|
|Materials Select Sector SPDR ETF (XLB)||N/A||N/A||4.1|
- Newmont Corp.: See above for company description.
- Sherwin-Williams Co.: See above for company description.
- FMC Corp.: FMC manufactures herbicides, insecticides, and other agricultural chemicals. The company serves customers around the world.
YCharts. "Financial Data," Accessed May 27, 2020.
LyondellBasell Industries N.V. "LyondellBasell Reports First Quarter 2020 Earnings," Accessed May 27, 2020.
Eastman Chemical Co. "Eastman Announces First-Quarter 2020 Financial Results," Pages 1 & 6. Accessed May 27, 2020.
Newmont Corp. "Newmont Announces Solid First Quarter 2020 Results," Accessed May 27, 2020.
Corteva Inc. "Corteva Names Sam Eathington Senior Vice President and Chief Technology Officer," Accessed May 27, 2020.
Sherwin-Williams Co. "The Sherwin-Williams Company Reports 2020 First Quarter Financial Results," Pages 1 & 7. Accessed May 27, 2020.