Cabot Chosen for $50M Award Negotiation to Aid Battery Supply Chain

Cabot Corporation CBT recently announced that the U.S. Department of Energy's ("DOE") Office of Manufacturing and Energy Supply Chains has selected it for an award negotiation for up to $50 million. This award, which is part of the Bipartisan Infrastructure Law, will help Cabot develop a new manufacturing facility in the United States to make battery-grade carbon nanotubes (CNTs) and conductive additive dispersions on a commercial scale.

These minerals are crucial to the domestic lithium-ion battery supply chain for electric cars (EVs) and the electrical grid, reducing reliance on imports. The DOE funding will cover approximately 30% of the project's entire anticipated investment of $181 million. Cabot intends to revitalize, retrofit and restore a former automotive site in Wayne County, MI, to become the United States' first production facility for battery-grade CNTs and conductive additive dispersions.

Cabot has teamed up with the North American Building Trades Union, the International Chemical Workers Union Council and the Michigan Building and Construction Trades Council to support this project, which is expected to generate hundreds of new construction and full-time manufacturing jobs. This new manufacturing operation will strengthen the domestic supply chain for crucial battery ingredients, lowering dependency on foreign imports.

This investment emphasizes Cabot's role as a key participant in the energy transition, offering breakthrough material solutions not only in battery technologies but also throughout the energy storage and management ecosystem. Cabot's contributions go beyond conductive additives, including aerogels for improved thermal management, metal oxides for cathode durability and novel carbons for fuel cell optimization, all of which are critical for the next generation of sustainable energy solutions.

Shares of Cabot have gained 62% in the past year against a 1.4% decline of the industry.

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CBT anticipates fiscal 2024 adjusted earnings per share of $7.00 to $7.10. This range represents a 30 cents increase at the midpoint, driven by the company's expectations for improved results in the Performance Chemicals segment due to higher demand and a more favorable product mix compared to the first half of the year, as well as continued strong results in the Reinforcement Materials unit.

Zacks Rank & Key Picks

CBT currently carries a Zacks Rank #3 (Hold).

Better-ranked stocks in the basic materials space include Carpenter Technology Corporation CRS, Eldorado Gold Corporation EGO and Hawkins, Inc. HWKN.

Carpenter Technology currently carries a Zacks Rank #1 (Strong Buy). CRS beat the Zacks Consensus Estimate in each of the last four quarters, with the average earnings surprise being 15.9%. The company's shares have soared 111.7% in the past year.

The Zacks Consensus Estimate for Eldorado's current-year earnings is pegged at $1.35 per share, indicating a year-over-year rise of 136.8%. EGO, a Zacks Rank #1 stock, beat the consensus estimate in each of the last four quarters, with the average earnings surprise being 430.3%. The company's shares have rallied roughly 71.6% in the past year.

The Zacks Consensus Estimate for Hawkins' current fiscal-year earnings is pegged at $4.14, indicating a rise of 15.3% from year-ago levels. The Zacks Consensus Estimate for HWKN's current fiscal-year earnings has increased 12.8% in the past 60 days. HWKN, a Zacks Rank #2 (Buy) stock, has rallied around 99.1% in the past year.

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