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

The 10 Countries with the Highest Suicide Rates

The 10 Most Technologically Advanced Countries in the World

The 10 Safest Countries in the World to Live in Peace

The 10 Top Selling Smartphones in the World 2014

The 12 Biggest Shopping Centers in the World

The 10 Friendliest Countries in the World

Qihoo 360 Technology Co Ltd (QIHU), Actavis plc (ACT), Yahoo! Inc. (YHOO) Among 20 Long Ideas from Sohn Canada

The 10 Laziest Countries in the World

The 10 Most Polluted Countries in the World

The 10 Most Dangerous Cities in America 2014

The Top 10 Gold Producing Countries in the World

The 10 Tallest Buildings in the World

The 10 Richest Stand Up Comedians in the World

The 10 Fattest Countries in the World

The 5 Best Summer Jobs for Teens

The 10 Most Religious Countries in the World Keeping the Faith

The 10 Most Educated Countries in the World

The 10 Most Popular Cell Phones in the World

The 10 Drunkest Countries in the World

The 10 Most Expensive Private Schools in the World

The 10 Smallest Countries in the World

Walking Dead Season 5 Spoilers You’ll Wish You Didn’t Know

The 10 Poorest Countries in the World

The 10 Greenest Countries in the World

The Top 10 Countries with the Highest Population in the World

The 10 Most Visited Countries in the World

The Top 10 Star Wars Characters in the Iconic Series

The 10 Most Expensive Android Phones in the World

5 Reasons Why The Illuminati Is Real and a Threat to Society

The 6 Scariest Halloween Costumes Ever Screamed At

The 4 Biggest Hedge Fund Managers in the World Today

The 15 Most Densely Populated Countries in the World

The 10 Biggest Tea Drinking Countries in the World

Top 6 Ways to Improve Your Checkout Process and Close Sales

The 5 Most Profitable Online Businesses You Can Start Today

The 20 Most Profitable Hospitals in the US

The 5 Most Profitable Home Businesses to Start

The 7 Teams that Will Win the Stanley Cup in 2015

The Top 10 Most Expensive Digital Cameras to Snap Stunning Shots With

The 10 Highest Quality Fast Food Restaurants In America Today

The 8 Best Halloween Decorating Ideas to Spook Up Your House

10 Marvel Women that Should Get a Movie Right Now

The 20 Best Remixes of Popular Songs that Will Make You Forget the Originals

7 Most Expensive Cities in the World

5 Least Expensive Cities in the World

10 Celebrities Who Believe In Scientology

10 High Margin Food Products to Build a Business Around

The 10 Most Expensive Clothing Stores in the United States to Get Decked Out At

The 5 Biggest Kickstarter Scams That Swindled Backers’ Donations

The 10 Most Expensive Boarding Schools In the World

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!