Top Petrochemical Stocks Worth Buying Amid Middle East Conflict

Investing.com – Goldman Sachs analysts advise investors to focus on large-cap petrochemical stocks, as the Middle East conflict is driving supply shocks across the global chemicals market at a faster pace and with a greater magnitude than initially expected.

The firm previously outlined a four-stage framework explaining how the conflict affects the global chemicals market, from energy-driven price increases to inventory buildup, margin compression, and ultimately demand destruction.

However, cost shocks are now compressing, and in some cases even skipping certain stages entirely, especially in Asia, where signals are emerging at the fastest rate. Textiles and packaging are the first downstream segments to be impacted.

Goldman expects that the focus will shift from price increases to inventory dynamics, affordability considerations, and signals of demand destruction.

The Wall Street firm recommends that investors stick with large-cap names, because their larger scale, balance-sheet flexibility, and global sourcing expertise should enable them to better withstand potential working-capital volatility in the future.

Here are the top petrochemical stocks recommended by Goldman Sachs:

Linde - Goldman Sachs maintains a Buy rating for the industrial gases company, with a target price of €180.52. The firm believes that Linde’s scale and financial strength enable it to handle market volatility currently driven by Middle East supply disruptions.

ASF SE - The investment bank rates ASF SE as Buy, with a target price of €50.94. Goldman Sachs says the company’s larger market capitalization and operating flexibility are advantages during periods of supply-chain uncertainty and working-capital pressure.

Novonesis - Goldman Sachs rates Novonesis as Buy, with a target price of Dkr387.30. The firm recommends the stock based on its balance-sheet strength and global sourcing capability, which should help the company deal with accelerating cost shocks affecting the petrochemicals sector.

Goldman Sachs emphasizes that supply shocks are transmitting through the chemicals value chain at a faster pace than expected, making company-specific factors such as financial flexibility and procurement expertise increasingly important for investors.

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