Ticker: LYB, Buy below $75.
LyondellBasell is one of the largest plastics, chemicals and refining companies in the world.
Why I Would Buy
- Cheap – LyondellBasellcurrently sells at 7x trailing and forward earnings.
- Return on Equity – LYB has maintained a RoE in excess of 40%for past 5 years!
- Dividend – 5%+ yield.
- Credit Ratings – Investment grade credit ratings: Baa1/BBB+
- Low Dividend Payout – Less than 30% of earnings paid out as dividends.
What Could Go Wrong
- High COGS – Incredibly high COGS, approaching80%. Any increase in cost of raw materials will eat into profits.
- Decline In Income – MRQ net income slid down significantly (39%+) y-o-y.
Disclosure: I am long LYB, please read additional disclosures here before taking any action based on this post.