LyondellBasell Industries Touches 52-Week High at $110.67 - Analyst Blog

Shares of LyondellBasell Industries ( LYB ) clocked a new 52-week high of $110.67 on Aug 15, exceeding its previous high of $110.49. The stock pulled back a bit to end the trading session at $110.60 on that day.

The chemical giant, which has a market cap of around $57 billion, has seen its shares rise roughly 40% so far this year, outperforming a roughly 7% rise in the S&P 500 for the period. Average volume of shares traded over the last three months is around 2,795.7K. The company's long-term projected EPS growth is around 10.7%.

What's Driving LYB Up?

LyondellBasell's profit for second-quarter 2014, reported on Jul 25, jumped around 27% year over year as it saw gains across all segments, especially the Olefins & Polyolefins - Americas division. Both revenues and earnings for the quarter comfortably beat Zacks Consensus Estimates. The company expects strong production of oil, natural gas and natural gas liquids (NGLs) in the U.S. to support margins going forward.

LyondellBasell, which emerged from Chapter 11 bankruptcy in 2010, continues to benefit from favorable North American natural gas environment and is executing its expansion projects to leverage the U.S. NGLs advantage.

LyondellBasell remains on track with its ethylene expansion projects. The company's multi-plant ethylene expansion program, which started last year, represents a total investment of roughly $1.3 billion across its Channelview, La Porte and Corpus Christi facilities which benefit from shale gas production. The expansion program, when in full swing, is expected to expand annual ethylene capacity by an estimated 1.85 billion pounds for an aggregate projected capacity of 11.8 billion pounds in North America.

LyondellBasell's methanol plant at Channelview, TX (restarted in fourth-quarter 2013) along with its other major debottleneck projects (including expansion at La Porte) are expected to bring in new capacity at considerably lower cost than building new facilities. LyondellBasell expects to start production from the La Porte ethylene expansion project in the third quarter.

That said, LyondellBasell is exposed to volatility in raw material and energy costs and a still challenging European market.

LyondellBasell is a Zacks Rank #2 (Buy) stock.

Other companies in the chemical space worth considering include Minerals Technologies Inc. ( MTX ), Celanese Corporation ( CE ) and Johnson Matthey plc ( JMPLY ). While Minerals Technologies retains a Zacks Rank #1 (Strong Buy), both Celanese and Johnson Matthey sport a Zacks Rank #2 (Buy).

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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