Huntsman Corporation (HUN), Eastman Chemical Company (EMN): Two Buys and 1 Sell In the Chemical Industry

Page 1 of 2

The financial meltdown of 2008 was particularly hard on cyclical stocks. Companies in the chemical industry reported huge losses in the recessionary period, and 45 U.S. chemical companies had to file for bankruptcy in 2008.

With the economic recovery taking hold, chemical companies have shown signs of relief. The U.S. chemical industry accounts for 15% of the world’s chemical industry output, and its contribution towards the GDP of the United States stands at a staggering 25%. We can expect some solid investment opportunities to arise here as the industry has a growth outlook in the United States and internationally.

Huntsman Corporation (NYSE:HUN)

Larger chemical companies have a better chance of exploiting the revival in the chemical industry as they have global operations with access to multidimensional markets. Three companies in the United States fall into this criterion. They are Huntsman Corporation (NYSE:HUN), The Dow Chemical Company (NYSE:DOW) and Eastman Chemical Company (NYSE:EMN).

Huntsman’s weak fundamentals

Huntsman Corporation (NYSE:HUN) is a global leader in the consumer and industrial chemical industry. The company’s annual revenues are close to $11 billion. Like all cyclical stocks, the company suffered in the financial meltdown, but the trailing three years have seen the company’s performance improve.

The pigment segment of the company has been its fastest growing segment. The segment was reporting strong margins until prices for titanium dioxide started to fall. Due to this change, the company reported a net loss of $24 million in the first quarter.

The second-fastest growing segment of the company is its polyurethane segment because the company’s margins for MDI urethanes have improved. The earnings from this segment were able to partially offset the negative earnings from the pigment segment. Huntsman Corporation (NYSE:HUN) is planning to expand its polyurethane business by acquiring the privately held specialty urethane polyols maker Oxid. The acquisition will improve the company’s footprint and possibly take it out of its recent losses.

The current situation of the company looks slim and I would not be investing my money in this company.

The Dow Chemical Company (NYSE:DOW)’s attractive dynamics

The Dow Chemical Company (NYSE:DOW) is the second largest chemical company globally. Its chemical products are used as raw materials in different industries. The first quarter sales of the company dropped 2% on a year-over-year basis. However, the company expects its performance plastics, electronic & functional materials and agricultural sciences segments to show robust growth in the coming months.

The company has been successful in increasing its quarterly cash flow from operations. As of March 2013, the company has received up to $2.48 billion from its K-Dow transaction with the Petrochemical Industries Company of Kuwait. The Dow Chemical Company (NYSE:DOW) used this amount to repurchase $1.5 billion of its shares and reduce the company’s gross debt. The lower amounts of debt would reduce the interest expense of the company making it a less risky investment.

Page 1 of 2
blog comments powered by Disqus
Insider Monkey Headlines
Insider Monkey Small Cap Strategy
Insider Monkey Small Cap Strategy

Insider Monkey beat the market by 52 percentage points in 24 months Click to see monthly returns in table format!

Lists

10 Cities with High Demand for Nurses

6 of the Worst Greeting Card Messages Ever Crafted

6 Ways to Make Money in ArcheAge and Build Your Empire

10 Foods To Eat To Lower Cholesterol Levels

The 10 Most Hated Television Characters of All Time

The 30 Worst Halloween Costume Ideas Ever Brought to Horrible Life

10 Vocational Skills in Demand Today with Jobs Waiting to be Filled

10 Best Places to Visit in Central and South America

The 10 Greatest Empires in History Which Nearly Conquered the World

The 6 Cheapest Boarding Schools In America 2015

5 Clear Reasons LoL is Better than DotA, Continues to Rule MOBAs

The Only 9 Teams with a Chance to Win the Super Bowl

The 15 Most Common Phobias in America that Induce Fits of Panic

Top 6 Least Expensive Tourist Destinations in 2014

Jim Goetz, Peter Fenton, Jim Breyer: Top 6 Venture Investors for 2014

Top 15 Billionaires in 2014

5 Pitfalls To Avoid When Buying a Franchise

Top 20 Medical Schools in the US – 2014 Rankings

4 Business Strategies that Turned Jamie Oliver into the World’s Richest Chef

6 Qualities That Make You A Good Team Player

10 High Paying Seasonal Jobs in America this Holiday Season

The 10 Busiest Shipping Lanes in the World

5 Most Valuable Brands in China

The 10 States with Highest Substance Abuse Rates Crippling Their Populace

The Top 10 Things to Do Before You Die That Will Echo for Eternity

The 10 Best Selling Items on Etsy

Top 10 Things to Do in Tokyo, the Greatest City in the World

10 Mistakes on Social Media that Can Harm You and Will Probably Get You Canned

The 10 Best Cities to Find Jobs in 2014

The 10 Most Controversial Songs Of All Time to Hit (and get Banned from) the Airwaves

The 20 Biggest IPOs in US History

The 10 Best Places to Visit in Mexico that Are Beautiful and Safe

7 Bad Habits that Age You Beyond Your Years

The 40 Best Fortune Cookie Sayings That Will Leave You Bemused, Befuddled, or Beguiled

10 Foods to Eat Before a Workout to Make Every Drop of Sweat Count

The 5 Best Documentaries On Netflix You Must See

The Most Heartwarming and Inspirational Story Of This Halloween Season, It Will Make You Cry and Jump For Joy

10 Best Party Songs of All Time to Bring the House Down With

5 New World Order Conspiracy Theories that Will Strangle the World

The 10 Highest Rated Movies of 2014

The 10 Largest Container Shipping Companies in the World

The 10 Largest Armies in the World: Who Should We Be Afraid Of?

Best Warren Buffett Quotes on Money You Need to Hear

The 10 Highest Suicide Rates by Profession

The 20 Most Underrated Movies of All Time

The 10 Fastest Growing Companies in America

The 10 Biggest Outlet Malls in USA

The 5 Most Popular Rap Songs of All Time

The 10 Countries that Eat the Most Meat

The10 Most Expensive Countries to Fly To

Subscribe

Enter your email:

Delivered by FeedBurner

X

Thanks! An email with instructions is sent to !

Your email already exists in our database. Click here to go to your subscriptions

Insider Monkey returned 47.6% in its first year! Wondering How?

Download a complete edition of our newsletter for free!