Stocks to Buy: 5 Reasons Value Investors Should Consider Dow Chemical Today
-
Upload
the-motley-fool -
Category
Economy & Finance
-
view
7.618 -
download
1
Transcript of Stocks to Buy: 5 Reasons Value Investors Should Consider Dow Chemical Today
![Page 1: Stocks to Buy: 5 Reasons Value Investors Should Consider Dow Chemical Today](https://reader035.fdocuments.in/reader035/viewer/2022062503/58722b541a28ab3b7a8b60c1/html5/thumbnails/1.jpg)
Stocks to Buy: 5 Reasons Value Investors Should Consider Dow
Chemical Today
Image source: Dow Chemical
![Page 2: Stocks to Buy: 5 Reasons Value Investors Should Consider Dow Chemical Today](https://reader035.fdocuments.in/reader035/viewer/2022062503/58722b541a28ab3b7a8b60c1/html5/thumbnails/2.jpg)
Diversity: Helps reduce earnings volatility1
![Page 3: Stocks to Buy: 5 Reasons Value Investors Should Consider Dow Chemical Today](https://reader035.fdocuments.in/reader035/viewer/2022062503/58722b541a28ab3b7a8b60c1/html5/thumbnails/3.jpg)
Diverse businesses
Performance plastics Performance materials
& chemicals Infrastructure solutions Consumer solutions Agricultural sciences
Dow operates five business segments:
Source: Company website
![Page 4: Stocks to Buy: 5 Reasons Value Investors Should Consider Dow Chemical Today](https://reader035.fdocuments.in/reader035/viewer/2022062503/58722b541a28ab3b7a8b60c1/html5/thumbnails/4.jpg)
Diverse end markets Dow’s broad product portfolio serves several
key industries across 180 countries
Source: Company website
![Page 5: Stocks to Buy: 5 Reasons Value Investors Should Consider Dow Chemical Today](https://reader035.fdocuments.in/reader035/viewer/2022062503/58722b541a28ab3b7a8b60c1/html5/thumbnails/5.jpg)
Innovative leadership: A compelling competitive advantage2
![Page 6: Stocks to Buy: 5 Reasons Value Investors Should Consider Dow Chemical Today](https://reader035.fdocuments.in/reader035/viewer/2022062503/58722b541a28ab3b7a8b60c1/html5/thumbnails/6.jpg)
Full steam ahead
Dow demonstrated its innovative leadership last year, with
More than 5,000 new product launches 635 new U.S. patents – a record for the company
![Page 7: Stocks to Buy: 5 Reasons Value Investors Should Consider Dow Chemical Today](https://reader035.fdocuments.in/reader035/viewer/2022062503/58722b541a28ab3b7a8b60c1/html5/thumbnails/7.jpg)
Solid foundation for the future
Dow’s patent-advantaged sales are growing rapidly – they now make up nearly a quarter of its total revenue
Source: Company website
![Page 8: Stocks to Buy: 5 Reasons Value Investors Should Consider Dow Chemical Today](https://reader035.fdocuments.in/reader035/viewer/2022062503/58722b541a28ab3b7a8b60c1/html5/thumbnails/8.jpg)
Strong operational performance and financials3
![Page 9: Stocks to Buy: 5 Reasons Value Investors Should Consider Dow Chemical Today](https://reader035.fdocuments.in/reader035/viewer/2022062503/58722b541a28ab3b7a8b60c1/html5/thumbnails/9.jpg)
Growing profitsDow’s net profit has more than doubled on flat revenue during the past five years
![Page 10: Stocks to Buy: 5 Reasons Value Investors Should Consider Dow Chemical Today](https://reader035.fdocuments.in/reader035/viewer/2022062503/58722b541a28ab3b7a8b60c1/html5/thumbnails/10.jpg)
Rapidly rising EBITDA*
*EBITDA = Earnings before interest, tax, depreciation, and amortization. Figures on a trailing 12-month basis. Chart source: Dow Q2 2015 earnings presentation.
![Page 11: Stocks to Buy: 5 Reasons Value Investors Should Consider Dow Chemical Today](https://reader035.fdocuments.in/reader035/viewer/2022062503/58722b541a28ab3b7a8b60c1/html5/thumbnails/11.jpg)
How is Dow pulling it off?
Through a threefold strategy Increased focus on high-margin value-added
productsTarget investments to exploit lower feedstock (crude
oil, natural gas) costsDivesting non-core operations to drive down costs
![Page 12: Stocks to Buy: 5 Reasons Value Investors Should Consider Dow Chemical Today](https://reader035.fdocuments.in/reader035/viewer/2022062503/58722b541a28ab3b7a8b60c1/html5/thumbnails/12.jpg)
Strong financials
Key stats as of June 30, 2015Cash and cash equivalents: $6.2 billionLong-term debt: $17.8 billionInterest coverage ratio: 7.9Free cash flow (TTM*): $3.2 billion
*TTM = Trailing twelve months
![Page 13: Stocks to Buy: 5 Reasons Value Investors Should Consider Dow Chemical Today](https://reader035.fdocuments.in/reader035/viewer/2022062503/58722b541a28ab3b7a8b60c1/html5/thumbnails/13.jpg)
Point to noteDow’s cash flows have grown while debt has
declined during the past five years
![Page 14: Stocks to Buy: 5 Reasons Value Investors Should Consider Dow Chemical Today](https://reader035.fdocuments.in/reader035/viewer/2022062503/58722b541a28ab3b7a8b60c1/html5/thumbnails/14.jpg)
Big-ticket growth plans = solid foundation for the future4
![Page 15: Stocks to Buy: 5 Reasons Value Investors Should Consider Dow Chemical Today](https://reader035.fdocuments.in/reader035/viewer/2022062503/58722b541a28ab3b7a8b60c1/html5/thumbnails/15.jpg)
Investing for growth Major growth projects underway: Potential to
add more than $3 billion in annual EBITDA
Source: Dow Chemical 2014 Annual Report
![Page 16: Stocks to Buy: 5 Reasons Value Investors Should Consider Dow Chemical Today](https://reader035.fdocuments.in/reader035/viewer/2022062503/58722b541a28ab3b7a8b60c1/html5/thumbnails/16.jpg)
Investing for growth
Key projects includeSadara: Dow-Saudi Aramco joint venture to build the world’s largest petrochemical facilityNew ethylene, propylene production plants in Texas
![Page 17: Stocks to Buy: 5 Reasons Value Investors Should Consider Dow Chemical Today](https://reader035.fdocuments.in/reader035/viewer/2022062503/58722b541a28ab3b7a8b60c1/html5/thumbnails/17.jpg)
Impressive shareholder returns5
![Page 18: Stocks to Buy: 5 Reasons Value Investors Should Consider Dow Chemical Today](https://reader035.fdocuments.in/reader035/viewer/2022062503/58722b541a28ab3b7a8b60c1/html5/thumbnails/18.jpg)
Value for shareholdersDow demonstrated its commitment to shareholders in 2014, when it
Increased its dividend twiceExpanded its share repurchase program to $9.5 billion from $4.5 billion
![Page 19: Stocks to Buy: 5 Reasons Value Investors Should Consider Dow Chemical Today](https://reader035.fdocuments.in/reader035/viewer/2022062503/58722b541a28ab3b7a8b60c1/html5/thumbnails/19.jpg)
Growing dividends
Dow’s dividend has grown at a compounded rate of 19% since 2009
Source: Dow Chemical 2014 Annual Report
![Page 20: Stocks to Buy: 5 Reasons Value Investors Should Consider Dow Chemical Today](https://reader035.fdocuments.in/reader035/viewer/2022062503/58722b541a28ab3b7a8b60c1/html5/thumbnails/20.jpg)
Higher buybacksShare buybacks have ramped up, too
Source: Dow Chemical 2014 Annual Report
![Page 21: Stocks to Buy: 5 Reasons Value Investors Should Consider Dow Chemical Today](https://reader035.fdocuments.in/reader035/viewer/2022062503/58722b541a28ab3b7a8b60c1/html5/thumbnails/21.jpg)
To sum up
Dow Chemical measures up on key counts: operational performance, financials, growth catalysts, and shareholder returns. So any dip in its
share price could present an opportunity for value investors.
![Page 22: Stocks to Buy: 5 Reasons Value Investors Should Consider Dow Chemical Today](https://reader035.fdocuments.in/reader035/viewer/2022062503/58722b541a28ab3b7a8b60c1/html5/thumbnails/22.jpg)
This Could Be The Next Billion-Dollar iSecret