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Jim Cramer - Mad Money Dow Inc. (Formerly Dow Chemical) (DOW-N) DOW-N BUY ON WEAKNESS Dec 06, 2024

Still sells at 20x PE. Estimates keep going down, because of China--stocks that have any association with China tend to hurt. That said, if this stock reaches a 7% dividend yield, you must buy.

Jim Cramer - Mad Money

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Stock price when the opinion was issued

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WATCH

It reports Thursday. Plastics and copper are directly tied to economic growth. Listen to the quarterly call for their progress to gain clues about the economy.

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.

COMMENT

Shares popped last Friday on hopes that China's stimulus plans can boost Dow, a stock that has been slumping lately.

BUY

The best time to buy this is right now, at the start of rate-cutting, which will boost housing and products associating with home-building like appliances and carpets which require chemicals. Also, China's stimulus is a boost to cyclicals levered to China's economy.

DON'T BUY

It's tied to China, like all materials stocks are, and those stock keep going down. Don't touch this until at least January.

DON'T BUY

It's broken. When a stock's broken support, you don't want to buy it.

DON'T BUY

Like the other chemical companies, DOW is trading as if they are just calls on China turning around. This is wrong to do.

DON'T BUY

It's near-9% dividend yield is too big. Something is awry here.

WEAK BUY

Hope that it rises from the ashes as AT&T did?

Not sure it's going to rally the way AT&T did. Very different sectors. In his modelling, he's been in accumulation mode. Likes it at these levels on a risk/return basis, screens well for value. High yield is probably a risk factor at this point. Not a lot of upside potential to analysts' price target.

(Analysts’ price target is $32.00)

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