What Did You Buy Today?

[divmenow]

(06-16-2021, 10:45 AM)Otter Wrote:

(06-16-2021, 10:29 AM)brought divmenow Wrote: New position in LYB

Fits my theme. Nice 4% dividend and PE under 20

LYB is in a strange spot right now, enjoying the increased pricing for its olefin/polyolefin products that make up more than half its revenues (brought on by global re-opening and supply chain disruptions), but is also pressured by the rapidly increasing costs of its input (crude oil), and may be facing long term pressure for its major revenue source, as many governments around the world seek to reduce the amount of plastic packaging/pollution. 

Its average P/E ratio over 10 years is 9.85. So on a TTM basis it is 56% above its average P/E, and using FAST Graphs' blended P/E of 11 (incorporates future earnings estimates), it is 11.6% above its average P/E.

Prior to listing under its current ticker and raising its dividend for 11 consecutive years, Lyondell declared bankruptcy and wiped out all of its shareholders. It operates in an extremely low-margin business that can easily be disrupted by spikes in the price of crude, competitive pressure from foreign entities not subject to equivalent environmental/workplace regulations, and any substantial change to demand for its products. Bought some shares in the $60-70 range last year, and sold a bit over $100 a few months back. IME, companies like this always seem to crater right after releasing glowing quarterly reports about record profits and profit expectations (got burned by AA and FCX this way years back). Commodities and basic materials are rough.

 You can throw all that out. They got hurt pre-pandemic and their plastic material business in on fire. They are just at the beginning.  Bankruptcy in 2009 was a long time ago. There are 100's of same like companies that went through that and are trading at new highs. Just because they had issues in the past doesn't mean the future isn't bright. 

There total debt right now is 0.23%. Very low. So the probably of them going bankrupt again is very unlikely. In fact CAT carries a higher debt and bankrupt probability at 39%


LYB posted profits of $1,070 million or $3.18 per share in first-quarter 2021, up from $144 million or 42 cents in the year-ago quarter. Earnings per share topped the Zacks Consensus Estimate of $2.65.
Revenues increased 21.2% year over year to $9,082 million in the reported quarter. However, the figure missed the consensus mark of $9,328.5 million. Consolidated EBITDA for the quarter more than doubled year over year to $1,585 million.