Chemours Co (NYSE:CC) was born two years ago this month when legendary chemical company EI Du Pont De Nemours And Co (NYSE:DD) spun it off.
At the time, DD was having trouble with its performance chemicals divisions, which were under pressure due to the recession and other economic factors.
For example, one of CC’s divisions has been closely linked to the oil industry since John D. Rockefeller started Standard Oil in 1870. When the U.S. oil got hit by Saudi Arabia’s oil dumping in late 2014, that had a significant effect on DD’s performance chemicals for this sector.
Similar problems were happening in its titanium dioxide business, where the company’s products are used in paints, laminates and coatings. And its refrigeration and Teflon-related business were also under pressure.
DD’s management decided to bundle these liabilities together and spin it off, keeping alive the R&D work at the heart of DD. Simply put, if CC sunk, so be it.
Spinning Off the Risk Proved Impressively Profitable
But, since its spinoff, CC has outperformed its parent fivefold. And, in the past 12 months, CC is up a stunning 459% while DD is up a mere 33%. The irony here is obvious.
DD called the bottom in its performance chemicals. And, it is certainly to our advantage at management gave investors a chance to buy into these businesses without being stuck with what are arguably the worst aspects of DD.
CC is the most focused aspect of the sprawling DD empire and that has proven to be a very good thing.
CC is now the one of the world’s top producers of titanium dioxide (TiO2), which is used to make whites whiter in everything from paint to food to toothpaste. TiO2 prices had dropped to multi-year lows when CC was spun off, but now they’re rising again. And because CC is a top producer, it has significant pricing power and market-leading margins as prices improve.
Similarly, with the U.S. oil sector turning around, its chemical solutions division is going gangbusters once again. Fracking and refining chemicals are in growing demand and CC is a major player in the sector.
Its Fluoroproducts division is getting the benefit of the resurgence in chipmaking and the popularity of mobile phones. It also makes refrigerants that can be substituted for ozone-depleting hydrochlorofluorcarbons (HCFCs).
Bottom Line on CC Stock
CC is still a young company, relatively speaking, but it has major exposure in all the markets it works in. And as the U.S. economy expands, so will the fortunes of CC stock.
Chemours is valued like a tech company at this point, simply because CC stock is much more in line with a tech firm than an average chemical company. Its divisions are just at the beginning major market shifts that will help CC keep the growth going.
Louis Navellier is a renowned growth investor. He is the editor of five investing newsletters: Blue Chip Growth, Emerging Growth, Ultimate Growth, Family Trust and Platinum Growth. His most popular service, Blue Chip Growth, has a track record of beating the market 3:1 over the last 14 years. He uses a combination of quantitative and fundamental analysis to identify market-beating stocks. Mr. Navellier has made his proven formula accessible to investors via his free, online stock rating tool, PortfolioGrader.com. Louis Navellier may hold some of the aforementioned securities in one or more of his newsletters.
