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7 Points For Braskem's Star Success

Mar. 07, 2018 4:14 AM ETBraskem S.A. (BAK)2 Comments


  • Braskem SA is a petrochemical company. It produces a diversified portfolio of petrochemical and thermoplastic products, thermoplastic resins, including polyethylene, polypropylene and PVC.
  • BAK produces polypropylene in the United States and Germany, and produces, operates, and sells ethylene, HDPE, and LDPE in Mexico. The company also imports and exports petrochemicals, and fuels.
  • Seven points to BAK success: (1) Declining Dividend Yield; (2) Surging Momentum; (3) Price Upsides; (4) Net Gains; (5) Consistent dividends; (6) Pessimistic Analysts; (7) Fortuitous financial events.
  • This basic materials equity shows positive beta numbers. Share price has gained 266% from $12 in February 2016 to nearly $32 February 2018; annual dividend yield has crashed from 10% in July, 2016 to 2.8% in 2018.
  • Six analysts cover the stock and forecast a $32 price upside to 2019. A repeat of the past year price performance projects a possible BAK price gain to $38 or more.

Seven Points of Braskem Success As Noted 3/6/18

1. Declining Dividend:

BAK Yield dropped from 10% to 2.82% between July 2016, and December 2017. There were two causes. First, single share price averaged $14.84 in 2016 and two dividends were paid out, one in April and another in October. Second, BAK share price jumped to $26.74 in December 2017 and only one dividend was paid out as BAK settled corruption lawsuits in addition to dividend reckoning.

2. Surging Momentum:

Growing from just being Brazil's largest Chemical company valued at 1.6B in 2009, to becoming the worlds seventh largest by 2018 and increasing it's Market Capitalization to $13B by 2018 is truly a surge. Along the way BAK acqired facilities and expanded production in Mexico, Texas, and Germany.

3. Price Upsides:

Key dates and prices since 2015:

(Low= $6.83 8/4/15; High=$31.99 1/24/18)

7/28/15 $7.15

7/19/16 $11.60

10/25/16 $18.02

11/8/16 $17.48

7/19/17 $24.97

11/1/17 $31.00

3/6/18 $29.11

4. Net Gains:

On January 17, Investors Business Daily (IBD) reported:

"On Wednesday, Braskem (BAK) got an upgrade to its Relative Strength (RS) Rating, from 79 to 84.

IBD's proprietary RS Rating tracks market leadership by using a 1 (worst) to 99 (best) score that shows how a stock's price performance over the last 52 weeks matches up against that of all other stocks.

Over 100 years of market history reveals that the stocks that go on to make the biggest gains typically have an RS Rating of over 80 in the early stages of their moves.

Earnings growth dropped in the company's most recent report from 165% to -7%, but revenue rose from -2% to 24%.

The company holds the No. 9 rank among its peers in the Chemicals-Basic industry group. Westlake Chemical (WLK), Huntsman (HUN) and LyondellBasell

This Basic Materials sector dividend equity has qualified twic as a valuable catch! It was listed as the 42nd selection of 52 Dogs of the Week (DOTW)I portfolio in June, 2016. It was also selected 47th on July 7, 2017 fir the DOTW II portfolio. Recently a Safari to Sweet Success (Dogs of the Week III) launched in early September. It has not yet been selected due to a dividend under 3.5% Click here to subscribe or get more information about the Dogs Of the Week portfolios,.

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This article was written by

Fredrik Arnold profile picture

Fredrik Arnold is a retired quality service analyst sharing investment ideas with a primary focus on dividend yields by utilizing free cash flow and one-year total returns as trading indicators.

He is the leader of the investing group The Dividend Dog Catcher, where he shares a minimum of one new dividend stock idea per week with focus on yield or extraordinary financial circumstances. All ideas are archived and available after weekly announcement. Learn more.

Analyst’s Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

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Comments (2)

You are missing 3 other things, one is that PBR wants to sell its 47% voting participation, second PBR and Braskem can not so far reacg an agreement over a new long term nafta supply agreement, which may dramatically affect costs and third polyolefines prices may go down in the next 12 months....other than that Braskem is a good company but I would not buy avove $ 25
Fredrik Arnold profile picture
BAK was best bought two years ago at $13.60! The company is rapidly shedding its Brazillian ties. It is growing it's business in Mexico, Texas, and Europe. It will likely not see $25 again. If it does, pounce!
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