E I Du Pont De Nemours And Co (DD), The Dow Chemical Company (DOW): Should We Follow Nelson Peltz Into This Stock

BASF is the cheapest valued among the three. The market values BASF at only 5.76 times its trailing EBITDA. BASF also offers shareholders decent dividend yield at 2.7%. BASF is one a global leader in the chemical industry with broad market access and a diversified product portfolio, operating in five main businesses including Chemicals, Performance Products, Functional Materials & Solutions, Agricultural Solutions, and Oil & Gas. BASF has kept expanding its footprint globally, with the BASF/Sinopec joint venture, and further expansion and new production and formulation capacities for crop protection in Asia Pacific and South America.

BASF does not expect that worldwide economic growth and demand for chemicals would accelerate in the second half of this year. However, the company aims to grow sales and EBIT this year with higher return on capital. In the next three years, its excellence program STEP might deliver around €1 ($1.33) billion to earnings each year compared to the 2011 earnings base. Around €300 ($399) million is expected to be achieved within this year.

My Foolish take

E I Du Pont De Nemours And Co (NYSE:DD) has all the characteristics to be a long-term stock pick for patient investors, thanks to its global leading position, strong balance sheet, cash flow generating capability, and decent dividend yield. Nelson Peltz did not reveal his intention for DuPont. However, with a conglomerate structure and many business segments, a spin-off of the low margin businesses is very likely.

Anh HOANG has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned.

The article Should We Follow Nelson Peltz Into This Stock originally appeared on Fool.com.

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