Dow-30 component DuPont (DD - Free DuPont Stock Report) may not seem overly alluring at first blush. But a closer look at this chemical manufacturer suggests that the blue-chip stock has enough potential to suit specific investment strategies.
DuPont’s roots can be traced back to the early 1800’s, when it was originally founded as a maker and supplier of gunpowder. By the early 20th century, the company had expanded its position in the explosives arena via a string of acquisitions, essentially manufacturing and supplying its products to the U.S. military. With DuPont’s dominance growing, the Justice Department stepped in and ordered the company to divest some of its units. DD would eventually tap into other areas that proved to be quite lucrative. Indeed, from the latter half of the 19th century and throughout the 20th century, the company began to focus on making non-explosives, turning much of its attention to materials science, where research and development efforts would lead to a number of notable breakthroughs, including synthetic rubber and nylon.
Today, DuPont is known as one of the largest chemical manufacturers in the world, offering a diverse range of high-performance materials and products used in a variety of applications, targeted at the construction, agricultural, medical, biotechnology, and nutrition markets, among others. The Business Blurb section (located at the center of the Value Line page) provides a brief business description, along with other information, related to the chemical giant.
Upon examining the report, we see that the issue is ranked 3 (Average) for Timeliness (found in the Ranks box at the top left-hand corner of the Value Line page), which means its price performance will likely only mirror that of the broader market in the year ahead. Yet, while not an exciting choice for the short term, we would not dismiss DD stock so quickly. Indeed, there are other features that give this blue chip appeal. The stock’s dividend yield (in the Top Label), for one, catches our eye. At 3.5%, investors can certainly expect a hearty return from cash distributions on the equity over the coming 12 months. Dividend amounts that have been declared and paid can be found in the Statistical Array (middle section of the page) and in the Quarterly Dividend box (bottom left-hand corner).
Another item that grabs our attention is the Safety rank, contained in the Ranks box. Like Timeliness, Safety ranges from 1 (Highest) to 5 (Lowest). DD’s rank of 1 implies its shares have the least amount of risk, and thus are safer, than the average issue under Value Line’s review. What’s more, the equity is fairly stable, as denoted by the Stock Price Stability mark of 75 (in the Ratings section in the lower right-hand corner of the page). That means the share price tends not to swing wildly on earnings surprises or misses. Also, within the Ratings box, note that the company gets a top-notch score of A++ for Financial Strength, indicating that finances (in terms of cash and debt) are particularly strong.
DuPont shares stand out for other reasons, too. Importantly, the Projections box, at the top left, shows solid percentage price gains expected over the coming three to five years, if one were to invest at the current price displayed on the Top Label. Within the same box, the annual total return shows the estimated rate of return, including price appreciation and prospective dividends, to be paid through the 3- to 5-year span. Based on these calculations, DuPont shares shouldn’t disappoint those looking to make money over the long haul, but wanting to sleep at night, too. Analyst Michael Napoli sums it up nicely in the Commentary section of the report, saying “conservative, income-seeking investors may find this equity attractive”.
At the time of this article’s writing, the author did not have positions in any of the companies mentioned.