NewMarket Corporation (NEU): A Bull Case Theory

We came across a bullish thesis on NewMarket Corporation on SharpeShark’s Substack. In this article, we will summarize the bulls’ thesis on NEU. NewMarket Corporation's share was trading at $857.11 as of October 7th. NEU’s trailing P/E was 16.57 according to Yahoo Finance.

NewMarket Corporation (NEU) is a leading parent company in the specialty chemicals sector, serving critical aerospace and defense applications through its subsidiaries. A key asset, American Pacific Corporation (AMPAC), acquired in January 2024, is one of only two Department of Defense (DoD)-approved suppliers of ammonium perchlorate (AP1), the primary oxidizer in solid rocket propellants used in missiles and space launch boosters.

AP1 is essential for the combustion of these fuels, and AMPAC’s position as a certified supplier provides a highly defensible and strategic moat. Historically, AMPAC was the sole domestic provider of AP1, and even after a secondary supplier was qualified by the DoD in 2021 due to shortages caused by the war in Ukraine, AMPAC remains one of only two approved domestic producers. The company’s role in supporting 16 DoD weapons systems as of 2020 underscores its critical importance to national defense and space programs.

In June 2025, NewMarket announced a $100 million investment to expand AMPAC’s AP1 production capacity by adding a new production line, expected to be completed in 2026. This strategic capital allocation reflects management’s confidence in the robust demand outlook for AP1, driven by ongoing defense and space program requirements.

The expansion positions AMPAC to strengthen its market leadership, meet rising demand, and further entrench NewMarket’s exposure to high-margin, mission-critical chemical products. Overall, NewMarket offers a compelling investment opportunity, anchored by AMPAC’s irreplaceable role in defense supply chains, predictable growth from AP1 demand, and proactive management actions that enhance both capacity and strategic positioning.

Previously we covered a bullish thesis on Eastman Chemical Company (EMN) by Necessary-Damage5658 in November 2024, which highlighted its strong positioning amid export controls and ability to capture market share from restricted competitors. The company's stock price has depreciated approximately by 38% since our coverage. The thesis still stands as regulatory-driven demand remains intact. SharpeShark shares a similar focus but emphasizes NewMarket’s critical role in defense supply chains through AMPAC.

NewMarket Corporation is not on our list of the 30 Most Popular Stocks Among Hedge Funds. As per our database, 22 hedge fund portfolios held NEU at the end of the second quarter which was 19 in the previous quarter. While we acknowledge the potential of NEU as an investment, we believe certain AI stocks offer greater upside potential and carry less downside risk. If you're looking for an extremely undervalued AI stock that also stands to benefit significantly from Trump-era tariffs and the onshoring trend, see our free report on the best short-term AI stock.

READ NEXT: 30 Stocks That Should Double in 3 Years and 11 Hidden AI Stocks to Buy NOW 

Disclosure: None.