3 Chemically Well-Endowed Stocks

By Aryeh Katz | September 21, 2010 AAA

For the most part, stocks in the basic materials sector trade with outlandish fundamentals and require an accounting background to properly value. But some of the more established companies in the group trade with recognizable - even attractive - valuation metrics. Within that group are a few companies that pay shareholders a reasonable dividend as well.
Below, we've detailed a trio of them: billion-dollar firms operating in the basic materials sector that offer a yield of at least 3.75% annually and a competitive price-to-earnings (P/E) ratio.

IN PICTURES: 5 Tips To Reading A Balance Sheet

Round And Round The Chemical Wheel

RPM International (NYSE: RPM) is a $2.43 billion company by market cap that manufactures and sells a wide variety of chemically based products, including various paints, sealants and adhesives. In the last year, the company's stock rose just 3.0%, a far cry from the 11.6% recorded by the broad materials sector, as represented by the iShares Dow Jones U.S. Basic Materials ETF (NYSE: IYM), of which RPM is a holding. Compared to the S&P 500, however, RPM shareholders have less to complain about. The SPDR S&P 500 ETF (NYSE: SPY), a proxy for the broad market, is up a mere 5.4% for the last 12 months.

The company appears to be on the acquisitions trail, having added two new foreign firms to its roster this past spring and summer: Chemtec Chemicals BV, based in the Netherlands; and Hummervoll Industribelegg AS, a Norwegian supplier and installer of industrial flooring systems. (To learn more, see Mergers and Acquisitions: Introduction.)

RPM shares trade with a 13.4 P/E and pay investors a reasonable 4.4% dividend. Investment Guru David Dreman also happens to own 1.4 million shares in the company. (To learn more about David Dreman, see The Greatest Investors: David Dreman.)

Old Friend Of The Dow

E. I. du Pont de Nemours and Co. (Du Pont) (NYSE: DD) has been a component of the Dow Jones Industrial Average since the depths of the Depression, joining the illustrious list in November 1935. But of late, the chemical giant has been pleasing investors profusely, turning in a gain of better than 30% in the last year while sporting a P/E of just 12.8 and still offering a 3.7% annual dividend.

Du Pont has a market cap just shy of $40 billion.

MeadWestvaco (NYSE: MWV) provides paper and plastics packaging solutions to a broad array of industrial and commercial clients. The $4.1 billion company by market cap has a dividend yield of 3.8% and trades at a multiple of 16.6 times last year's earnings. The stock is up 5% in the last year.

The Wrap

Don't let anyone tell you otherwise. A number of well-established, dividend-paying stocks can be found in the basic materials cohort. And some, like those three mentioned above, also have some upward momentum.

Use the Investopedia Stock Simulator to trade the stocks mentioned in this stock analysis, risk free!

comments powered by Disqus
Related Analysis
  1. Fed Comments Should Spur Positivity - Ahead of Wall Street
    Stock Analysis

    Fed Comments Should Spur Positivity - Ahead of Wall Street

  2. Tepid Market Waters Across the Globe - Ahead of Wall Street
    Stock Analysis

    Tepid Market Waters Across the Globe - Ahead of Wall Street

  3. First Negative Week in a Month? - Ahead of Wall Street
    Stock Analysis

    First Negative Week in a Month? - Ahead of Wall Street

  4. I've Seen It, But I Don't Believe It - Ahead of Wall Street
    Stock Analysis

    I've Seen It, But I Don't Believe It - Ahead of Wall Street

  5. ECB Finally Does QE - Ahead of Wall Street
    Stock Analysis

    ECB Finally Does QE - Ahead of Wall Street

Trading Center