Jefferies & Company Weigh in on Specialty Chemicals Industrials

On Friday, July 2, Jefferies & Company came out with a report that suggests chemical investors to find a mix of secular growth names along with companies that combine continuous structural improvements with operational leverage. The S&P 500 has overperformed the specialty chemicals industry by nearly 5% in the past two months. Major concerns regarding the sustainability of the U.S. consumer demand, along with the U.S. showing a mix of weak datapoints, and disorder within the European economy all add to an unpleasant market outlook. If this is to continue, analysts at Jefferies see the best risk/reward for investors with a short-term timeframe to be found in Solutia (SOA), Albemarle (ALB) and Air Products (APD). Jefferies & Company analysts expect chemical companies not to raise full-year outlooks until the end of the third quarter. This may cause chemical shares to respond negatively to any sales momentum, quarterly EPS results, or commentary of 2H10 trends, ultimately leaving a rare chance for positive near-term performance.