aitraders

Crosscurrents at Dow Chemical Make a Clear Forecast Impossible

Basically, I believe with the new CEO they have become more focused strategically. What I have read about R&H is that their products are able to retrieve higher margins and looking at their Income statements, balance and cash flow, the fact that the company operates in generally non-competing areas should not only make the purchase accredititive but if they achieve the cost synergies as stated, then R&H could be an excellent profit driver within their 2/3 major section.

Secondly, with regard to the Kuwaiti JV, I believe the vertical integration could offer superb cost management opportunity in the future, as it is clear in my mind that oil will continue, as in the last 50 years, to cyclically spiral upwards. Without this kind of integration, we would still have the cyclical DOW whose earnings would be hard pressed if oil goes back up to $150 (or above).

Lastly, I am also a big believer in food and the worlds need for it, the changing lifestyles of the asian consumer and increase of protein in their diet and what that means for the Ag stocks, and in this case the, up to now, only part of 1/3 of their sales. I believe the 10% growth figure is probably appropriate for now, but over the next 10 years, I believe 10% is underestimating potential in this department.

Unlike the older DOW whose dividend was unreliable and growth management not transparent, I think the combination of all the deals above are a true catalyst for a company makeover under the new CEO. We just need to wait until they are 'done'. By 2010, I dont believe DOW will have any problems going to $40.

Should be fun to watch with (I only have..) a 8% yield.