Chemical Stocks Plunge: Values or Traps?

• (1:00) - Can You Find Strong Value Investments Within The Chemical Industry?
• (7:30) - Tracey’s Top Stock Picks
• (25:00) - Episode Roundup: EMN, DOW, SCL, JMPLY
•                 [email protected]

Welcome to Episode #416 of the Value Investor Podcast.

Every week, Tracey Ryniec, the editor of Zacks Value Investor portfolio, shares some of her top value investing tips and stock picks.

The chemical industry stocks have been struggling as earnings estimates have been cut.

The Chemical – Diversified industry is in the bottom 4% of Zacks Rank Industries. It ranks 234 out of 245 industries.

Why is it ranked so low?

When this podcast was recorded on Aug 27, 2025, there were 28 companies in the industry. Out of those, there were no Zacks Rank #1 (Strong Buys). There was only one #2 (Buy) stock. It’s featured on the podcast.

There were thirteen #3 (Hold) stocks, four #4 (Sells) and eleven #5 (Strong Sell) stocks.

The number of Strong Sell stocks in this industry reflects that the problems are industry wide. It has been an industry wide slowdown for the last 4 years.

When these companies say “challenging macroeconomic environment”, they mean it. And now they are also dealing with tariffs.

There is a lot of uncertainty.

Definition of a Value Stock Compared to a Trap

It can look attractive to buy a stock that has sold off. Some of the chemical companies are trading at 5-year lows.

A value stock is usually defined as one that is trading with low valuations in price-to-earnings, price-to-sales, or PEG ratios.

But those aren’t the only factors. To avoid the trap, look at the earnings. Are they declining? Or growing?

Value investors should be buying rising earnings. They, too, want growth. A trap will have declining earnings.

3 Chemical Stocks Trading Near 5-Year Lows: Values or Traps?

1. Eastman Chemical Co. (EMN)

Eastman Chemical has a market cap of $7.8 billion. It operates 16 manufacturing facilities globally and makes chemicals, plastics and fibers. Shares are down 25.3% year-to-date and are at 5-year lows.

Eastman Chemical has a forward price-to-earnings (P/E) ratio of just 11.2. A P/E ratio under 15 usually indicates value. It also pays a dividend, currently yielding 4.9%.

Eastman Chemical is a Zacks Rank #5 (Strong Sell).

Is Eastman Chemical a value or a trap?

2. Dow Inc. (DOW)

Dow has a market cap of $17.5 billion. It operates 91 manufacturing sites in 30 countries. Shares of Dow are down 39% year-to-date.

It does not have a P/E as earnings are expected to be a loss of $0.83. Dow recently cut its dividend 50% but it still yields 5.7%. It has paid a dividend every year since 1912.

Dow is a Zacks Rank #5 (Strong Sell).

Is Dow a value or a trap?

3. Stepan Co. (SCL)

Stepan has a market cap of just $1.2 billion. It’s a specialty chemicals company with Surfactants and Polymers. Shares of Stepan are down 22.3% year-to-date.

It trades with a forward P/E of 24. Stepan also pays a dividend, which is yielding 3%. It has raised its dividend every year for 57 years.

Stepan is also a Zacks Rank #5 (Strong Sell).

Is Stepan a value or a trap?

Bonus Stock on the Podcast: A Zacks #2 (Buy) Stock

Find out which are values, and which are traps, on this week’s podcast and see the top ranked bonus stock too.

Zacks Names #1 Semiconductor Stock

This under-the-radar company specializes in semiconductor products that titans like NVIDIA don't build. It's uniquely positioned to take advantage of the next growth stage of this market. And it's just beginning to enter the spotlight, which is exactly where you want to be.

With strong earnings growth and an expanding customer base, it's positioned to feed the rampant demand for Artificial Intelligence, Machine Learning, and Internet of Things. Global semiconductor manufacturing is projected to explode from $452 billion in 2021 to $971 billion by 2028.

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This article originally published on Zacks Investment Research (zacks.com).

Zacks Investment Research

Source Zacks-com