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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.