ALPEK Is Trading Based On A Low Point In The Cycle, And Is An Opportunity

Oct. 16, 2024 4:55 AM ETALPEK, S.A.B. de C.V. (ALPKF) Stock
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Summary

  • ALPEK is a Mexican plastics manufacturer with global operations concentrated in Mexico, the US, and South America. The company is one of the largest producers of PET and PP.
  • Its markets are very cyclical, based on capacity availability and oil prices.
  • Over the cycles, ALPEK has not made the best capital allocation, but has remained profitable even during the low points, and its debt is manageable.
  • Today, ALPEK's share price is depressed because of the cycle, but the stock offers a 10% current earnings yield, and a 30% cycle-average yield.

Still life of plastic bottles, source of pollution

Monty Rakusen/DigitalVision via Getty Images

ALPEK (OTCPK:ALPKF) is a Mexican plastics manufacturer with global operations concentrated in Mexico, the US, and South America.

The company focuses on the PET (PTA/PET/rPET) and polystyrene (EPS, PP, Arcel) value chains. It is the largest producer of PET in the

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Quipus Capital
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Long-only investment, evaluating companies from an operational, buy-and-hold perspective.Quipus Capital does not focus on market-driven dynamics and future price action. Instead, our articles focus on operational aspects, understanding the long-term earnings power of companies, the competitive dynamics of the industries where they participate, and buying companies that we would like to hold independently of how the price moves in the future. Most QC calls will be holds, and that is by design. Only a very small fraction of companies should be a buy at any point in time. However, hold articles provide important information for future investors and a healthy dose of skepticism to a relatively bullish-biased market.Disclaimer: All of the author's articles are written on an "as is" basis and without warranty. They represent the author's opinion only and in no way constitute professional investment advice. It is the responsibility of the reader to conduct their due diligence and seek investment advice from a licensed professional before making any investment decisions. The author disclaims all liability for any actions taken based on the information contained in any articles published.

Analyst’s Disclosure: I/we have a beneficial long position in the shares of ALPKF either through stock ownership, options, or other derivatives. 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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