What happened

Shares of titanium dioxide manufacturer Kronos Worldwide (NYSE:KRO) rose as industry analysts predicted improvements through 2017, thanks to strengthening construction, real estate, and automotive markets, as well as potential cosmetics applications. 

Titanium dioxide is a versatile chemical used primarily as a white paint pigment. So it's no surprise that when industries that use a lot of white paint prosper, so too do the fortunes of titanium dioxide manufacturers like Kronos.

Can of white paint with paintbrush.

Titanium dioxide is the primary white pigment used in paints. Image source: Getty Images.

So what

The gains being made by titanium dioxide manufacturers are nothing new. The industry had a strong 2016 that has carried over into 2017, with all of the major publicly traded titanium dioxide manufacturers showing double- or even triple-digit gains, handily beating the overall market:

KRO Chart

KRO data by YCharts.

However, that chart is a bit misleading, because the entire industry also had an absolutely horrible 2014 and 2015. In fact, if you go back to January 2014, you see that all of the stocks have underperformed the market since then (Chemours, which wasn't spun off from DuPont until July 2015, doesn't appear on this chart):

KRO Chart

KRO data by YCharts.

As you can see, the reason 2016 looked so good for titanium dioxide stocks is that they all hit bottom in January 2016, so there was nowhere to go but up. And of them, only Huntsman has surpassed its January 2014 price. 

But that could mean there's still an opportunity here for investors.

Now what

The titanium dioxide industry is projected to continue its improvements, which will likely lead to additional share price gains for Kronos and its peers in the coming months. But it's also a cyclical industry, which means any investor would need to stomach a lot of volatility. Also, you should realize that -- as with any cyclical stock -- at some point, the share price is probably going to drop again. Kronos has seen such boom-and-bust cycles over the past decade, resulting in a roller coaster of a price chart:

KRO Chart

KRO data by YCharts.

Making money on Kronos -- whose balance sheet is currently a mess, by the way, with $50.7 million in cash and $335.4 million in long-term debt, for a debt-to-EBITDA ratio of 4.1 -- probably requires timing the market, a risky proposition. And making any kind of long-term bet on this volatile industry would likewise be asking for trouble.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.