U.S. materials index versus U.S. equity index - source: Morningstar Trailing one year, the materials sector has massively outperformed by more than 2,380 basis points compared with 185 basis points of underperformance a quarter ago. As a result of the rally from the depths of the pandemic, just two U.S. basic materials stocks we cover now trade in 4-star territory, and no stocks trade at 5 stars. Less than 10% of materials stocks trade at attractive discounts - source: Morningstar Industrial gas firms’ sales held up well in 2020 despite COVID-19. Their resilient on-site businesses benefit from long-term customer agreements with fixed fees and take-or-pay clauses. We expect the sector to benefit from a rebound in merchant volumes in 2021, continued growth in the electronics end market, and strong demand for medical gases. Furthermore, we believe that industrial gas companies are well positioned to capitalize on new opportunities in green hydrogen.