They make cars and airplanes more economical and lighter. And, they insulate extremely efficiently against noise, heat and cold and thus ensure comfortable living. They make technological revolutions such as the computer or the smartphone possible. And last but not least, they help in medicine and keep food fresh. You may have guessed that we’re talking about plastics. These polymers have changed our world in recent decades and driven technological progress like no other material.
Plastics are Becoming Increasingly Important
The versatility of plastics is indispensable in almost all industries today. And in the future, pretty much all experts agree, polymers will play an even greater role. Whether it be to strengthen the recycling economy or to enable technologies for renewable energies or electromobility.
So the chemical industry, which is responsible for producing plastics, can look forward to rosy times. Consider this: In 2017 in Germany alone, roughly 3,400 plastics manufacturers generated around 100 billion euros – and revenues are rising.
These Stocks Benefit from Growth in the Plastics Market
As an investor, you should definitely have this trend on your radar. After all, plastics stocks can generate handsome returns, and not just in the long term. Due to the very high prices for plastics, the chemical industry has recently been able to generate considerable profits.
Take BASF (OTC:BASFY), for example. They are the world’s largest chemical group in terms of sales recently benefited from the boom in plastics. The company’s polymer products, including polyurethanes, were able to achieve significantly higher prices in the third quarter of 2021. Polyurethanes are important for foams, coatings, adhesives, potting compounds, mattresses, seals and hoses, among other things.
Leverkusen-based chemicals competitor Covestro (OTC:COVTY) also performed strongly. In the second quarter, the company multiplied its operating profit thanks to high plastics prices. Incidentally, Covestro plans to present its new third-quarter figures on November 8. Be sure to keep this date in mind. There could be more positive surprises there.
But the plastics boom isn’t just in to Germany. Just a few days ago, Dow (NYSE:DOW) also presented strong growth in sales and earnings in the third quarter.
My Tip For You: Recycling with Quantafuel (OTC:QNTFF)
When it comes to plastics stocks, be sure to pay attention to recycling. After all, recycling polymers is probably the biggest growth driver in the industry. The big players like Covestro and BASF are making big investments in recycling.
But as an investor, you can also focus on recycling in a much more targeted way. For example, with the Norwegian company Quantafuel. The company has built a chemical process that can convert plastic into high-value substances, like pyrolysis oil. This dark brown liquid can be used as an additive for biofuels, among other chemical applications.
Growth Story Intact – Shares Still Quite Cheap
In the meantime, Quantafuel has been able to win well-known chemical companies as partners and significantly improve its sales. Although the company is still in the red, its growth story is intact.
Quantafuel plans to publish its Q3 financial statements on November 11. You should definitely keep an eye on this date as well.
At any rate, Quantafuel stock is still fairly cheaply valued. According to Marketscreener, analysts consider a doubling of the share price possible on average.