Valhi

Stock: VHI

Rating: Buy

Author: Waleed M. Tariq

Overview

  • Valhi is a chemical holding corporation.
  • The Simmons family controls Contran, which controls the corporation.
  • Chemical, component items, and real estate contributed to Valhi’s 2021 income.

Bullish

  • The family-owned enterprise is backed by investors and set to profit in Chemical.
  • Valhi’s earnings are projected to grow sequentially in 2022 after a strong Q1.
  • The stock’s sensitivity to optimistic market signals and growth prospects make me enthusiastic.

Bearish

  • Sluggish years could be a red flag to potential investors.

Kronos Chemical

  • Kronos has 4,000 clients across 100 nations.
  • Kronos, a producer and seller of TiO2 pigments, generates the most revenue.
  • Facts & Factors predicts the worldwide TiO2 market will reach $27.2 billion by 2028.
  • Kronos is the 5th-largest TiO2 producer worldwide, accounting for 6%.
Worldwide Titanium Dioxide production capacity
Kronos Form 10-K
  • KRO stock has gained 11% and yielded 4.5 percent.
Kronos and S&P 500 total return
Data by YCharts
  • Kronos’ exceptional operating profitability increased Valhi’s net income to $45.4 million, or $1.59 per share.
  • I predict Valhi’s EPS to grow in line with expected sequential growth in 2022, improving its earnings.
VALHI debt to equity and debt to assets
Data by YCharts

Valuation

  • 43% below industry median, 10% below 5-year average. Even though the PE is high, the stock is still a good buy.
  • Current metrics and 5-year averages indicate a 70% upside. The stock has traditionally traded below the industry median.

Conclusion

  • VHI stock offers upside potential if you can handle the volatility. Bullish stocks can also be bearish. Therefore, it’s a buy-and-hold stock.