Opinions
David Burrows
Dow Inc. (Formerly Dow Chemical) (DOW-N)
DOW-N
BUY
Feb 18, 2016
$47.570
Stock price when the opinion was issued
chemicals
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BUY ON WEAKNESS
We'll be in a trading range in the short term at least. The Fed is so behind the inflation curve; inflation so high. Can the Fed engineer a soft landing? Even 7 rate hikes won't cure inflation. We need to fix supply chains. On the positive side, she always felt 2022 growth will be slower than 2021, because fiscal supports have ended. Housing is still strong. Banks are lending, and consumers have historically high amounts of cash to spend. She is adding during this weakness to Dow Chemicals and American Express for example. Look for solid fundamdentals.
chemicals
DON'T BUY
Chemical companies are industrials, and industrials do poorly during recessions. Shipments are down 14%, so earnings will struggle. 7x earnings. Dividend hasn't grown in last 5 years, so higher inflation wipes out your income. Yield is unattractive at 5.6%, which is only high because stock price has come down. Instead, he owns DHR and TMO.
chemicals
The chemical sector over the last few years has been the best place in basic materials. The low price of natural gas has helped. When the markets corrected, all chemical stocks sold off, found lows and tested them twice. This one is behaving quite well. The market is voting that this is one of the places you could see a good recovery.