3 Top Picks in the Chemical Sector: The Dow Chemical Company (DOW) and More

Rockwood Holdings, Inc. (NYSE:ROC)

Looking to 2013, despite the macro uncertainty, Rockwood is expected to outperform the space as:

1) The management remains committed to separating Rockwood from the TiO2 business in 2013, thereby helping the valuation multiple recover;

2) The management has provided clarity on the uses of its $1.4 billion cash hoard (post the collapse of the Talison acquisition), which includes a $400 million (~10%) share repurchase program;

3) Investors focus on the potential for upside to Rockwood’s numbers helped by solid lithium demand/pricing, steady growth in ceramics and the potential start to a recovery in the Performance Additives segment.

Foolish Bottom Line

Stocks in the chemical space witnessed a solid 2012 as far as the capital appreciation is concerned. However, this is just the beginning of a huge rally that can be achieved given that the management of the respective companies takes adequate actions to help shareholders make large gains. Let’s see if the management is able to deliver in 2013 as well.

The article 3 Top Picks in the Chemical Sector originally appeared on Fool.com and is written by Masam Abbas.

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