What happened

Shares of Chemours (CC -2.81%) dropped nearly 14% last month, according to data from S&P Global Market Intelligence. The specialty chemical manufacturer reported third-quarter 2018 earnings that were pretty solid compared with the year-ago period. Unfortunately for shareholders, the business just can't escape the uncertainty hanging over the North American titanium dioxide industry, or the uncertainty regarding environmental litigation in its fluoroproducts segment. 

So what

Chemours delivered year-over-year increases in adjusted EBITDA for all three operating segments in the third quarter of 2018. The chemical solutions segment grew adjusted EBITDA 33% to $24 million, the fluoroproducts segment grew adjusted EBITDA 15% to $182 million, and the titanium dioxide segment grew adjusted EBITDA 8% to $268 million.

A declining graph drawn on a chalkboard.

Image source: Getty Images.

That's pretty much been the story for Chemours all year. In the first nine months of 2018, the business has delivered a nearly 50% increase in earnings before income taxes compared with the year-ago period. But it doesn't necessarily remove the risks from owning the business.

Now what

There are two big risks for investors poking around Chemours to consider. First, the North American titanium dioxide industry is struggling to overcome the uncertainty Tronox has stirred up. The company has failed to gain American regulatory approval for its acquisition of Saudi Arabia-based Cristal because the Federal Trade Commission says too much market power would be concentrated into too few hands. Wall Street hasn't taken the news lightly, rightly or wrongly extrapolating what it means for the other four producers that dominate North American production should they look to expand.

Second, Chemours is caught up in some rather serious environmental litigation alleging (with strong evidence) that the company has polluted waterways in North Carolina. It's strikingly similar to a massive lawsuit originating in Ohio that forced the company and its former parent DuPont to split a $670 million payout in 2017. And an $850 million settlement 3M agreed to in Minnesota in early 2018. Could another balance sheet-breaking fine be on the horizon for Chemours?

The stock may appear cheap, but investors that want to build wealth in a responsible way shouldn't buy this stock.