Chemical stocks can be volatile enough in their own right, as they are sensitive to the prices of key inputs like oil (naphtha) and natural gas and demand is typically tied to economic growth. Braskem (NYSE:BAK) seems to offer additional risks, as investors worry about the impact of electricity rationing on the Brazilian economy and the company's competitiveness with gas-based cracking capacity.
Questions about the health of the Brazilian economy are valid, as the company has about two-thirds share in Brazil and over half of its sales go into this economy. Even so, the market appears to be overdoing it and the discount to other chemical companies seems to wide to ignore. I believe that fair value for...
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