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+--- Thread: Chemicals (/showthread.php?tid=4806)
Chemicals - SamAdams - 09-27-2013
Interesting charts on EMN, CE and ALB. EMN rolling a little bit but inwould add/buy at support. CE looks great and has highest European revenue exposure at about 40% if you want to play a snap back there. ALB could be powerful if it holds at support here but more downside risk if it breaks. A lot of institutional investors looking to add more cyclicality to the mix, fwiw.
RE: Chemicals - admin - 09-28-2013
Thanks, Sam.
EMN seems to be about to break out (but that could also be to the downside), CE has already broken out a multiple top, not sure about ALB.
http://www.finviz.com/screener.ashx?v=211&t=EMN,CE,ALB
RE: Chemicals - SamAdams - 12-04-2013
Just an FYI for those interested to look at these names again from a technical point of view. Looks to be a sustainable group move, IMO.
RE: Chemicals - admin - 12-05-2013
I will, thanks for that, Sam
RE: Chemicals - SamAdams - 12-05-2013
from a MS strategy piece entitled 2014 in 2014. Explains how some might be looking at the group.
Materials: The sector is only 3.5% of the S&P 500 and is weighted about 2/3rd toward chemicals, so unlike
other regions in the world, going overweight materials is not necessarily a bullish call on China infrastructure.
We are increasing our exposure from 4% to 6%. Our bets in materials are only in chemicals. We are
increasing our long-standing position in LYB from 1% to 2%, and establishing a 1% position in EMN, and
retaining our 2% position in MON.
Energy: We are downgrading energy from equal weight to underweight and reducing our exposure from 9%
to 7% vs. the benchmark weight of 10.4%. The short explanation is that we think Brent oil will go lower.
Adam Longson, our commodities strategist, has articulated that excess supply is likely to weigh on the price
near-to-medium term. What have we learned over the past few years? When Brent gets to around $125
there is clear demand destruction. So, if the oil price goes higher, investors will think it is more supply-fear
than demand and that will weigh on the sector's performance. If oil goes lower, we don't want to own energy
stocks. So, we are in a band here where we think it could be “heads you lose, tails you lose” for energy
sector exposure. Ole Slorer thinks it's premature to bet on a sustained rally in oil services. The integrated
names are not growing and would need a dramatic reduction in capital spending to spur huge free cash flow,
and the faster growing oily mid-cap names (EOG, PXD) now seem crowded and have displayed a negative
convexity recently (they go down more when oil goes down than they go up when oil goes up). We are
removing our 3% position in CVX and now are naked integrated oil in the portfolio. It screens poorly in our 3
month model. We are removing KMI, which Steve Maresca downgraded. We are adding a 2% position to NE,
which screens well in our models, is recommended by Ole Slorer, and seems toward the bottom of its tight
recent trading range.
RE: Chemicals - admin - 12-05-2013
Huntsman
• YTD performance: +46%
• Dividend yield: 2.1%
• Payout ratio: 21%
• Forward P/E: 10.8
Chemicals stocks have been overlooked by some investors in the last year, partially because they are unsexy cyclical plays akin to commodity stocks. But the sector has quietly been climbing lately, and Huntsman Corp. HUN +0.70% is the frontrunner by far.
Huntsman stock is outperforming peers like DuPont DD -0.40% and Dow Chemical DOW +0.44% so far in 2013, and is also outperforming the S&P 500 SPX -0.13% handily, too. But even after its big run it is by far the best bargain in chemicals with a forward price-to-earnings ratio of just 10.8 based on fiscal year 2014 forecasts. Compared that with forward P/Es of about 14 for DuPont. Not bad!
Income-oriented investors may not be thrilled about the 2.1% yield, which is significantly less than the 2.8% or so offered by 10-year Treasurys right now. However, keep in mind that Huntsman is paying out just 21% of 2014 earnings in dividends and in 2013 hiked its payout 25%. There are undoubtedly future dividend increases in store to enrich your payouts over the long term.
And on the growth front, Huntsman is a rare opportunity for investors to enter into a low-risk stock while it still has a bit of pep and before it gets too sleepy. Huntsman was hard hit by the Great Recession, failing to turn a profit in both 2009 and 2010. But since then, the company retooled with layoffs and cost-cutting and has been on the upswing. Its dividend increase this year was the first since it started paying shareholders in 2007, proving management’s confidence in the balance sheet, and Huntsman is forecasting a 50% rise in earnings next year if all goes as planned.
A restructured Huntsman will soar if the economy gets back on track and demand for its chemicals used in paints, electronics and the automotive industry picks up. But if not? Well, you can have comfort in the low valuation and rock-solid dividend payouts to rely on for stability.
RE: Chemicals - admin - 12-06-2013
While Merrill concedes that the “cyclical bounce” that comes with economic expansion has already begun to play out, it’s not a ninth inning situation. That’s echoed in a recent research note from Mark Lushini , chief investment strategist at Janney Capital Management. He notes that virtually all of third quarter earnings growth for the S&P 500 was delivered by the cyclical sectors, led by a 20% year over year gain for Consumer Discretionary. He expects the cyclical leadership to be sustainable, in part based on recent data from the ISM Purchasing Managers Index:
Growth Returns: These Cyclicals Deserve Attention
RE: Chemicals - SamAdams - 04-01-2014
Just some "smelling salts" to re-look at this group - EMN, CE, ALB others. Haven't been killer stocks since late Sept. but AlB has flat lined on a high base and looks terrific. Worth doing the work I think.
RE: Chemicals - SamAdams - 04-01-2014
Just some "smelling salts" to re-look at this group - EMN, CE, ALB others. Haven't been killer stocks since late Sept. but AlB has flat lined on a high base and looks terrific. Worth doing the work I think.