After a year of challenging conditions amid pandemic-driven shutdowns and slumping end-use market demand, specialty chemical stock investors finally have something to smile about.
The group has outpaced the S&P 500 by around 3% since the start of the year as economic data points to a turnaround in manufacturing activity. In March, the Institute for Supply Management’s Manufacturing Purchasing Managers’ Index (PMI) came in at 59, edging up from 58.6 in February. Moreover, a reading above 50 indicates an expansion in factory activity.
Below, we take a closer look at three specialty chemical stocks trading at an all-time high (ATH) and outline possible trading tactics using technical analysis.
With a market capitalization of $147.1 billion, Linde plc (LIN) produces and processes atmospheric gases, such as nitrogen, hydrogen, carbon dioxide, and helium. The chemical maker reported a Q4 profit of $2.30 per share on revenues of $7.27 billion. Analysts had expected EPS of $2.14 on sales of $7 billion.
Chart-wise, Linde shares broke out above a period of two-week consolidation Friday to register a new ATH at $281.88. Those who play the bullish momentum should consider using a moving average as a trailing stop. To do this, simply remain in the trade until the price closes below the indicator.
The Sherwin-Williams Company
The Sherwin-Williams Company (SHW) manufactures and sells premium paints, coatings, and related products to professional, industrial, commercial, and retail customers. Despite sluggish conditions in the last three months of 2020, the company grew its bottom line 19% from a year earlier. What’s more, the paint seller has topped Wall Street’s earnings forecasts for the past four consecutive quarters.
From a technical standpoint, Sherwin-Williams shares pushed through resistance Friday to print a new ATH at $760. Active traders who buy here should think about using a trailing bar stop to bank profits. To do this, place an initial stop-loss order beneath Friday’s low at $737.17 and raise it under the low of each higher price bar.
PPG Industries, Inc.
Pennsylvania-based PPG Industries, Inc. (PPG) produces paints, coatings, and specialty materials for customers in a variety of industrial end markets. The coatings specialist disclosed Q4 earnings of $1.59 per share, up from $1.31 in the year-ago quarter. Meanwhile, net sales increased roughly 2% year over year to $3.8 billion.
Turning to the charts, the price eclipsed its mid-January peak Friday to set a new ATH at $154.94, forging a cup and handle chart pattern in the process. Short-term traders could set an exit price by measuring the cup’s height and adding that amount to the pattern’s breakout point. For example, adding $20 to $152.20 for a profit target at $172.20.
For a look at today’s earnings schedule, check out our earnings calendar.