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Olin (OLN) Stock Up 170% in 6 Months: What's Behind the Rally?
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Olin Corporation’s (OLN - Free Report) shares have surged 170.4% over the past six months. The chemical maker has also outperformed its industry’s rise of 21.1% over the same time frame. Moreover, it has topped the S&P 500’s 17.9% rise over the same period.
Let’s take a look into the factors that are driving this Zacks Rank #1 (Strong Buy) stock.
What’s Going in OLN’s Favor?
Olin is benefiting from productivity actions, the Lake City U.S. Army contract and its investment in the Information Technology (IT) project. Upbeat outlook for first-quarter 2021 has also contributed to the run-up in the company’s shares.
The company, last month, raised its outlook for the first quarter. It now projects first-quarter adjusted EBITDA in the range of $475-$500 million, higher than $400-$425 million expected earlier. The revised projection includes a net one-time benefit associated with Olin's customary financial hedges and contracts, maintained to provide protection from rapid and dramatic changes in energy costs. The outlook for the first quarter has further upside potential related to the final settlement of these one-time items linked with the winter storm Uri.
Earnings estimates for Olin have also been going up over the past two months. The Zacks Consensus Estimate for 2021 has increased around 342.5% while the same for first-quarter 2021 has gone up 262.5%. The favorable estimate revisions instill investor confidence in the stock.
Olin remains committed to improve its cost structure and efficiency and also drive productivity through a number of projects. It expects productivity measures to deliver $50-$100 million of net savings in 2021. Olin also sees its productivity actions to positively contribute to first-quarter results.
The company, in its fourth-quarter earnings call, also said that it expects price hikes for chlorine, epichlorohydrin, epoxy resins, bleach, ethylene dichloride and chlorinated organics to favorably contribute to its Chemicals businesses in the first quarter.
The company also expects higher performance for its Winchester business in 2021. The Winchester segment is expected to benefit from the Lake City U.S. Army ammunition contract. The multi-year contract is expected to significantly boost annual profitability of the unit. The company expects the contract to increase Winchester's annual revenues by $450-$550 million.
Olin is also expected to gain from cost and other benefits from its investment in the IT project. The project, which involves implementation of necessary IT infrastructure, is expected to maximize cost effectiveness, efficiency and control over its global chemical operations by standardizing business processes.
Other top-ranked stocks worth considering in the basic materials space include Nucor Corporation (NUE - Free Report) , Fortescue Metals Group Limited (FSUGY - Free Report) and Ashland Global Holdings Inc. (ASH - Free Report) .
Nucor has a projected earnings growth rate of 135.3% for the current year. The company’s shares have surged around 116% in a year. It currently sports a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.
Fortescue has a projected earnings growth rate of 107.8% for the current fiscal. The company’s shares have shot up around 123% in a year. It currently sports a Zacks Rank #1.
Ashland has an expected earnings growth rate of 83.2% for the current fiscal year. The company’s shares have rallied around 76% in the past year. It currently carries a Zacks Rank #1.
Zacks Top 10 Stocks for 2021
In addition to the stocks discussed above, would you like to know about our 10 best buy-and-hold tickers for the entirety of 2021?
Last year's 2020 Zacks Top 10 Stocks portfolio returned gains as high as +386.8%. Now a brand-new portfolio has been handpicked from over 4,000 companies covered by the Zacks Rank. Don’t miss your chance to get in on these long-term buys.
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Olin (OLN) Stock Up 170% in 6 Months: What's Behind the Rally?
Olin Corporation’s (OLN - Free Report) shares have surged 170.4% over the past six months. The chemical maker has also outperformed its industry’s rise of 21.1% over the same time frame. Moreover, it has topped the S&P 500’s 17.9% rise over the same period.
Let’s take a look into the factors that are driving this Zacks Rank #1 (Strong Buy) stock.
What’s Going in OLN’s Favor?
Olin is benefiting from productivity actions, the Lake City U.S. Army contract and its investment in the Information Technology (IT) project. Upbeat outlook for first-quarter 2021 has also contributed to the run-up in the company’s shares.
The company, last month, raised its outlook for the first quarter. It now projects first-quarter adjusted EBITDA in the range of $475-$500 million, higher than $400-$425 million expected earlier. The revised projection includes a net one-time benefit associated with Olin's customary financial hedges and contracts, maintained to provide protection from rapid and dramatic changes in energy costs. The outlook for the first quarter has further upside potential related to the final settlement of these one-time items linked with the winter storm Uri.
Earnings estimates for Olin have also been going up over the past two months. The Zacks Consensus Estimate for 2021 has increased around 342.5% while the same for first-quarter 2021 has gone up 262.5%. The favorable estimate revisions instill investor confidence in the stock.
Olin remains committed to improve its cost structure and efficiency and also drive productivity through a number of projects. It expects productivity measures to deliver $50-$100 million of net savings in 2021. Olin also sees its productivity actions to positively contribute to first-quarter results.
The company, in its fourth-quarter earnings call, also said that it expects price hikes for chlorine, epichlorohydrin, epoxy resins, bleach, ethylene dichloride and chlorinated organics to favorably contribute to its Chemicals businesses in the first quarter.
The company also expects higher performance for its Winchester business in 2021. The Winchester segment is expected to benefit from the Lake City U.S. Army ammunition contract. The multi-year contract is expected to significantly boost annual profitability of the unit. The company expects the contract to increase Winchester's annual revenues by $450-$550 million.
Olin is also expected to gain from cost and other benefits from its investment in the IT project. The project, which involves implementation of necessary IT infrastructure, is expected to maximize cost effectiveness, efficiency and control over its global chemical operations by standardizing business processes.
Olin Corporation Price and Consensus
Olin Corporation price-consensus-chart | Olin Corporation Quote
Stocks to Consider
Other top-ranked stocks worth considering in the basic materials space include Nucor Corporation (NUE - Free Report) , Fortescue Metals Group Limited (FSUGY - Free Report) and Ashland Global Holdings Inc. (ASH - Free Report) .
Nucor has a projected earnings growth rate of 135.3% for the current year. The company’s shares have surged around 116% in a year. It currently sports a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.
Fortescue has a projected earnings growth rate of 107.8% for the current fiscal. The company’s shares have shot up around 123% in a year. It currently sports a Zacks Rank #1.
Ashland has an expected earnings growth rate of 83.2% for the current fiscal year. The company’s shares have rallied around 76% in the past year. It currently carries a Zacks Rank #1.
Zacks Top 10 Stocks for 2021
In addition to the stocks discussed above, would you like to know about our 10 best buy-and-hold tickers for the entirety of 2021?
Last year's 2020 Zacks Top 10 Stocks portfolio returned gains as high as +386.8%. Now a brand-new portfolio has been handpicked from over 4,000 companies covered by the Zacks Rank. Don’t miss your chance to get in on these long-term buys.
Access Zacks Top 10 Stocks for 2021 today >>