Westlake Corporation (WLK): A Bull Case Theory

We came across a bullish thesis on Westlake Corporation on Valueinvestorsclub.com by JohnKimble. In this article, we will summarize the bulls’ thesis on WLK. Westlake Corporation’s share was trading at $89.58 as of September 11th. WLK’s trailing and forward P/E were 69.52 and 37.59 respectively according to Yahoo Finance.

Commodity chemicals companies are currently navigating trough business conditions, with stock valuations near decade lows, reflecting broad pessimism across the sector. Following the shale revolution, U.S. producers with access to cheap natural gas and NGLs gained a cost advantage in producing petrochemicals like polyethylene and PVC. Today, however, a confluence of factors—including excess capacity in China after a slowdown in construction and manufacturing, and energy price distortions due to the war in Ukraine—has flattened the global cost curve, causing even marginal producers to struggle.

Despite these temporary headwinds, historical cycles suggest eventual normalization through either capacity closures or restrained additions as global demand recovers. Westlake (WLK) stands out as an attractive opportunity amid this environment. As the second-largest fully integrated global chlor-alkali producer, Westlake benefits from structural advantages in ethylene feedstock access and energy efficiency in its electrochemical production process, which simultaneously produces caustic soda and chlorine, with the latter largely driving PVC output and linking profitability to construction demand. Current market conditions have depressed Westlake’s margins, but limited greenfield capacity additions in the U.S., closures in Europe, and restrained Chinese expansion support a favorable mid-cycle outlook.

Additionally, Westlake’s acquisition of Boral North America building products assets enhances its Housing & Infrastructure Products segment, complementing its PVC operations. Valuation analysis based on mid-cycle EBITDA of $2.7 billion, NOPAT of $1.3 billion, and EPS of $9.22 implies a share value around $110, reflecting significant upside from the current depressed levels. Risks include potential erosion of the shale cost advantage, changes in industry discipline, and energy price volatility. Overall, Westlake offers a compelling cyclical investment opportunity, with catalysts including a sector recovery, higher utilization, and structural capacity advantages.

Previously we covered a bullish thesis on LandBridge Company LLC (LB) by FJ Research in May 2025, which highlighted the company’s royalty model on 273,000 Permian Basin acres, its WaterBridge infrastructure platform, and emerging AI data center opportunities. The company’s stock price has depreciated by 25% since our coverage. The thesis still stands as LB continues to benefit from secular energy and AI tailwinds. JohnKimble shares a different perspective but emphasizes Westlake’s cyclical value, structural cost advantages, and mid-cycle recovery potential.

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Disclosure: None.