Why Buy E. I. DuPont De Nemours And Company Stocks in 2012

E. I. DuPont de Nemours Company Profile

Founded in 1802 to produce gunpowder, E. I. DuPont De. Nemours is now a science and technology company worth over $30 billion that calls itself “The miracles of science.”

When thinking of DuPont, most of us are led to believe we are dealing with a cyclical diversified chemical company that produces a bunch of meaningless chemical ingredients, and this is quite right. But we couldn't be further from the truth if we think this is all there is to DuPont.

Today, the company is a major player in science and technology producing important end product ingredients in a wide spectrum of disciplines, such as electronics science, biotechnology, synthetic fibers, and safety and security.

DuPont's public relations communicates their activity as market-driven science, and true enough, in 2009 they introduced more 1,400+ new products and 2,000+ patent grants.

The company has always a world leader in technology inventing such famous products as Nylon and Rayon in earlier times, and Teflon and Kevlar in more recent days. DuPont is going through a transition from a commodity producer to a real innovator with high hopes, and indeed, great prospects.

What Does DuPont Do?

In recent years, DuPont has chosen the strategy of reallocating its business activities into many growing market- and technology-focused platforms including:

  • Agriculture and Nutrition: a segment in fast growth with 30% of sales in brands such as Pioneer seeds, and a number of insect protection and similar systems. It is a less known fact that they acquired Pioneer in 1999 making them an important agriculture player. Lat year, they announced the acquisition of Danisco for $6.3 billion, a major manufacturer of food additives, ingredients, and enzymes, which warns of a quickening growth for the company's agriculture business.
  • Safety and Protection: the segment is responsible for the production of protective fibers and clothing, such as bulletproof apparel and disinfectants.
  • HealthCare & Medical: also produces protection apparel, protective building surfaces, and disinfectants.
  • Electronic and Communications: specializes in the production of high-tech materials for the semiconductor industry, such as ceramic packages and LCD substances.
  • Building Materials: is known for such omnipresent brands as Corian countertops and Tyvek housewrap.
  • Performance Chemicals, Performance Materials, and Performance Coatings remain the core activity segments.

Ticker symbol: DD (NYSE)
S&P rating: A
Value Line financial strength rating: A++
Current yield: 5.3%

DuPont's operations are present in 90 countries and over 60% of its net sales are realized outside the United States. Worldwide subsidiaries and affiliates of DuPont perform seed production, manufacturing, or sales activities; some distributing products made by the company.

DuPont boasts one of the biggest Research & Development budgets of any company in the world with over 75 R&D labs worldwide. The company's core research is carried out at its Delaware and Wilmington facilities focusing on renewable bio-based textures, modern biofuels, energy-saving technologies, advanced safety products, and alternative energy generation.

The Company's Growth

Around 2008, DuPont came up with the bold projection of 2012 earnings at $3.50 per share, up from $1.5. Everyone laughed.

In reality, they seem to be right on track to achieve that goal in early 2012. Core businesses are fast recovering as the auto industry is coming back up, while the new business activities are growing rapidly making major contributions.

According to market analysts, about 50% of business in 2012 will be generated by growth business activities and products. Moreover, the company CEO is projecting a yearly revenue increase of 7% and earnings growth of 12% during by 2015.

Reasons To Buy DuPont Stocks

DuPont is reinventing its businesses as an R&D leader, and is attempting to cash in on innovation and product leadership in established segments equally. Although the company has vast experience with innovation, the fact is among investors they are still not known for it. The product pipeline is full, individual product margins are strong, and the biggest cash-cows still dominate their markets.

DuPont's visionaries see a rapidly growing science and technology firm that realizes its profet by riding global megatrends such as population growth, the need for alternative energy, etc. They set worldwide food production at the center of their latest growth initiatives.

Alternative energy also enjoys the spotlight with Danisco being a leader in the synthetic cellulosic biofuels market by virtue of its Genencor enzymes business. The U.S. government has mandated over thirty billion gallons of yearly cellulosic biofuel production by the year 2017.

All in all, DuPont's diversification and initiative to be a leader in growth markets capitalizing on existing brands and innovative technology is impressive. The 3.3% dividend yield gives an added sense of safety and a chance at waiting for the act to really integrate into a whole.

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Comments 7 comments

Ardie profile image

Ardie 4 years ago from Neverland

Im not a financial whiz at all but I can see this would be a great company in which to invest! Aside from that I had no idea DuPont produced so much - I was one of the people that related DuPont with chemicals. This article was so easy to read and understand. You must have some experience explaining this stuff to the average person. Great job!


TahoeDoc profile image

TahoeDoc 4 years ago from Lake Tahoe, California

Sounds interesting. I am actually looking for new stocks to diversify (and maybe sell some covered calls :)). I will have to look into this for the future.


poshcoffeeco profile image

poshcoffeeco 4 years ago from Cambridgeshire

A very innovative worldwide company.Great information.A worthy article for any financial Blogger.Would make a good guest post somewhere.


Haunty profile image

Haunty 4 years ago from Hungary Author

Ardie, I'm glad you find this writing easy-to-read, even though your opinion doesn't count considering you have above average intelligence.

TahoeDoc, more ideas to come, as I'm being forced to write 30 in 30 right now.

poshcoffeeco, do you have a financial blog? I'd be more than happy to make a guest post. :)


TahoeDoc profile image

TahoeDoc 4 years ago from Lake Tahoe, California

I will be following along...Even though I'm rarely here these days, I still value the good insights I can get on a variety of subjects.


Ardie profile image

Ardie 4 years ago from Neverland

Haaaaaunty, its not above average intelligence at all. Its just that my skull is too small to hold all this brain...seriously. Wanna see the MRI? :D


Valentina 21 months ago

Jim BI have been prepping for a few years now. The first thing I think soneome should do as far as food is pack away rice and beans. These combine for a complete protein which is essential for prepping. I have rice and beans packed into mylar bags and 5 gal buckets with O2 absorbers. They last 25-30 years on the shelf.(see Brigham Young's research into shelf lives of dried food) It is very easy and not too expensive to pack away months worth of rice and beans that you will not have to rotate. Pasta, oats, sugar, can also be packed this way and last up to 30 years. Most serious preppers with families have hundreds of pounds of ric e and beans packed away in buckets. Rice and beans should be a staple of every food preppers plan. Healthy, incredibly long shelf life, filling, cheap.A great idea for emergency rice is to cook your rice. Then put it into a food dehydrator, dehydrate it completely. Then pack away in a mylar bag. When needed you open it up and it does not need to be cooked, only rehydrated. You can pour cold water on it if you need to and let it soak. That way of you are unable to get water boiling for whatever reason, you could still have some rice to eat. Or if you are trying to conserve fuel, just get the water a little warm and pour it on the dehydrated rice. Much less fuel use then boiling the rice. Mountain House sells this in #10 cans but it is cheaper to make your self.You can also dehydrate frozen vegies and pack them away in vacuum seal bags with o2 absorbers and they will last 8-10 years. I can give you links to good web sites if you need to learn how to do anyu of this.

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