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The elevated volatility within the inventory market over the previous month has not solely been mirrored in falling inventory costs. Some shares have carried out extraordinarily nicely because the starting of the yr. For instance, I simply discovered one: S&P500 It is a firm that gained a whopping 59% in lower than three months. Time to discover?
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what i am speaking about is Dow Company (NYSE:Dow). The corporate makes chemical compounds and supplies utilized in all the pieces from packaging to infrastructure. The corporate’s three foremost segments are Packaging and Specialty Plastics, Industrial Intermediates and Infrastructure, and Efficiency Supplies and Coatings. In 2025, Dow generated $40 billion in web gross sales, so this isn’t a distinct segment participant.
An important catalyst behind this yr’s surge is “Change to enhance efficiency” Program beginning in late January. Administration outlined value discount measures, together with the discount of roughly 4,500 jobs worldwide. On the identical time, we’re centered on modernizing customer support and manufacturing workflows utilizing AI and automation. The underside line is that they anticipate to appreciate a worth of $500 million this yr alone.
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Regardless of this yr’s rise in inventory costs, the inventory is just up 3% over the broader one-year interval. This speaks to the truth that buyers had been fairly fed up after the corporate posted an enormous $2.6 billion web loss final yr. A part of this loss was as a consequence of weak demand in worldwide markets corresponding to Europe. This stays a threat.
Nonetheless, this transformation plan has precipitated a lot optimism that the inventory worth has now absolutely recovered from its droop. Nonetheless, inventory costs are nonetheless removed from historic highs. It has decreased by 41% over the previous 5 years.
As for the longer term outlook, it’s tough to concretely decide whether or not the inventory worth will proceed to rise, as a lot will depend upon the newest data concerning the transformation. I feel there’s loads of room for the inventory to proceed rising if there’s excellent news within the coming months that signifies enterprise is on observe.
However even with out that issue, the corporate may benefit from continued provide disruptions on this space. It’s estimated that round 15% of the world’s polyethylene manufacturing capability is offline as a consequence of conflicts within the Center East. This lack of provide really advantages the Dow because the product turns into extra worthwhile. If the scenario takes a very long time to resolve, earnings might be boosted, albeit in an unsustainable method.
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We consider this inventory has the potential to be an undervalued inventory, however want to see extra affirmation first. The primary quarter outcomes are anticipated to be introduced inside a month, so I am going to wait till then to decide. We acknowledge that elevated volatility and uncertainty as a consequence of geopolitics stay a threat, however this inventory has nice potential if the turnaround plan begins to bear fruit. Buyers who agree with my views might contemplate including the inventory to their watchlist.