We came across a bullish thesis on Celanese Corporation on Hidden Rock Capital’s Newsletter’s Substack by Hidden Rock Capital. In this article, we will summarize the bulls’ thesis on CE. Celanese Corporation’s share was trading at $58.32 as of February 10th. CE’s trailing and forward P/E were 7.36 and 10.24 respectively according to Yahoo Finance.
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Celanese Corporation, a chemical and specialty materials company, manufactures and sells engineered polymers worldwide. CE has faced a difficult period over the past several years, with chemical sector headwinds—including low demand, slower GDP growth, and excess global capacity—compounded by the company’s $11 billion acquisition of Dupont’s Mobility & Materials business in 2022 at the peak of the cycle. This combination has driven Celanese’s stock down over 60% in five years, creating significant market pessimism.
Despite these challenges, Celanese has consistently generated adjusted earnings between $9 and $10 per share historically, excluding outlier years, and is projected to produce $700–$800 million in free cash flow in 2025 even in a weak demand environment. Applying historical P/E multiples of 10–12x, this suggests a base-case stock target of $90–$120 per share, more than double the current ~$50 price.
The market’s concerns around weak chemical demand, excess supply, and high debt are overstated. Demand is expected to recover in 2026–2027 as auto and housing sectors rebound and global supply chains stabilize, while ongoing capacity rationalization—including industry-wide plant closures and Celanese’s own Belgium acetate tow shutdown—should tighten supply and improve margins. The company has actively addressed its debt, using divestitures, free cash flow, and refinancing to reduce near-term obligations, with net debt projected to fall from $11.4 billion at Q3 2025 to under $9 billion by 2027, eliminating the perceived financial risk.
Looking ahead, Celanese’s stock could appreciate as fundamentals improve and debt overhang diminishes, with polyethylene price trends already signaling early signs of recovery. Technical indicators show momentum building above the 200-day moving average, suggesting potential near-term upside. Overall, Celanese represents a deep-value cyclical opportunity with a compelling risk/reward profile, positioned to more than double as industry conditions normalize and operational and financial catalysts play out.
Previously, we covered a bullish thesis on Celanese Corporation (CE) by Kyler Johnson in November 2024, which highlighted the company’s resilient Engineered Materials and Acetyl Chain segments, the path to managing debt after the Dupont M&M acquisition, and upside potential as manufacturing activity recovers. CE’s stock price has depreciated by approximately 23.76% since our coverage due to weak chemical demand, excess supply, and high debt. Hidden Rock Capital shares a similar perspective but emphasizes normalized free cash flow, sector recovery, and valuation upside as key drivers for the stock.
Celanese Corporation is not on our list of the 30 Most Popular Stocks Among Hedge Funds. As per our database, 45 hedge fund portfolios held CE at the end of the third quarter which was 50 in the previous quarter. While we acknowledge the risk and potential of CE as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than CE and that has 10,000% upside potential, check out our report about this cheapest AI stock.
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