Here's Why You Should Add AdvanSix Stock to Your Portfolio

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AdvanSix Inc.’s ASIX stock looks promising at the moment. With improving nylon demand fundamentals, solid financial health and rising earnings estimates, ASIX presents a compelling investment case. Its cheap valuation and healthy dividend yield are other positives.

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We are positive on the company’s prospects and believe that the time is right for you to add the stock to the portfolio as it is poised to carry the momentum ahead.

Let’s see what makes ASIX stock an attractive investment option at the moment.

Earnings estimates for ASIX for 2025 have been going up over the past 60 days, reflecting analysts’ optimism. The Zacks Consensus Estimate for 2025 has increased by 2.8%.

AdvanSix has outpaced the Zacks Consensus Estimate in three of the trailing four quarters while missed once. In this time frame, it has delivered an earnings surprise of roughly 18.9%, on average.

ASIX’s shares are currently trading at a level that is lower than the industry average, suggesting that the stock still has upside potential. Going by the EV/EBITDA (Enterprise Value/ Earnings before Interest, Tax, Depreciation and Amortization) multiple, which is often used to value chemical stocks, ASIX is currently trading at a trailing 12-month EV/EBITDA multiple of 6.74, cheaper compared with the industry average of 20.1.

AdvanSix, which produces nylon 6 resin, chemical intermediates and ammonium sulfate fertilizer, is benefiting from its differentiated product portfolio, exposure to diverse end markets and favorable demand and pricing. It is expected to gain from improved nylon demand conditions and the growth of its differentiated products. The favorable agricultural industry fundamentals also bode well for ammonium sulfate.

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ASIX delivered top and bottom-line growth and cash flow improvement in the third quarter of 2024 on the back of higher year-over-year pricing, improved North American nylon industry conditions and a constructive global acetone supply and demand environment. ASIX sees global acetone supply and demand to remain balanced to tight. North American nylon industry spreads are expected to modestly improve amid stable end-market demand.

ASIX has a healthy balance sheet and generates substantial cash flows, which allows it to drive shareholder value and fund growth initiatives. The company ended the third quarter of 2024 with cash and cash equivalents of roughly $17.3 million. Operating cash flow climbed around 175% year over year to $57.3 million while free cash flow increased by $31.1 million from the prior-year quarter to $26.8 million.

ASIX offers a healthy dividend yield of 2.3% (above the S&P 500′s average dividend yield of roughly 2%) at the current stock price. It has a five-year annualized dividend growth rate of 37.4%. The company’s dividend is perceived to be safe and reliable, backed by strong cash flows and sound financial health.