DuPont Is Well-Positioned For The Future

Sep. 22, 2019 11:41 PM ETDuPont de Nemours, Inc. (DD)24 Comments
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  • DuPont's stock has underperformed the broader market since Corteva was spun off (the last of the Dow-DuPont spin-offs).
  • However, DuPont is well-positioned for the future and I believe that DD shares will outperform the broader market over the next 18-24 months.
  • I hold a sizable position in DuPont and I have no plans to sell any shares in the near future.
  • This idea was discussed in more depth with members of my private investing community, Going Long With W.G.. Get started today »

DuPont de Nemours (NYSE:DD) is a stock that keeps giving - giving pain that is, as DD shares are down significantly since the last business, Corteva (CTVA), was spun out of the old DuPont-Dow in early June 2019.

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While the stock has not performed well lately, I still believe that DuPont is well-positioned for the future and that DD shares are attractively valued at today's price. Moreover, DuPont's thesis appears to be still intact, so investors should expect for DD shares to change course and outperform the market over the next 18-24 months, especially if the asset sale rumors come to fruition.

The Thesis Is Intact

DuPont is a newly created diversified, multi-industry company that has a promising portfolio of businesses.

Source: DuPont's Analyst Day Presentation

DuPont will definitely benefit from a strong (and improving) economy, but in my opinion, this management team also has the company in a position to maintain even in a soft macro environment (a valid concern at this point in time). To this point, during the most recent conference call, management told investors that they were encouraged by the synergy (revenue and cost) progress that has been achieved and that they still fully expect to deliver on improving the company's operating leverage. Additionally, let's not forget that DuPont still has a strong (and improving) cash flow profile.

It also helps the bull case that DuPont is performing well when compared to the company's peer group.

Source: DuPont's Analyst Day Presentation

At the end of the day, I believe that DuPont is well-positioned for 2020 and beyond. The management team is still working through the merger-split, but I believe that this company has multiple levers to pull to create shareholder value in the years ahead. And while the latest operating results were nothing to write home about, I

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This article was written by

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Our President and CIO is a CPA with experience in public accounting and the financial services industry. He earned his Master of Accountancy degree in 2008 and his B.S. in Business Management in 2007. He is also a Level III CFA candidate. He has been intrigued by the market from the start. Over the years, he has learned that long-term investing is a discipline that, if followed, will help contribute to building lasting wealth. As such, most of our articles will be about the investments that we plan to hold for at least 3 to 5 years, as long as the company's story does not change. As a Seeking Alpha contributor, our main goal is to write about the companies that are key to our portfolio with the hope of promoting discussion (for or against the investment) from others within the SA community.Please visit our website for more information about W.G. Investment Research LLC.

Disclosure: I am/we are long DD, CTVA. 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.

Additional disclosure: This article is not a recommendation to buy or sell any stock mentioned. These are only my personal opinions. Every investor must do his/her own due diligence before making any investment decision.

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