With shares of E.I du Pont de Nemours and Company (NYSE:DD) trading at around $44.93, is DD an OUTPERFORM, WAIT AND SEE or STAY AWAY? Let’s analyze the stock with the relevant sections of our CHEAT SHEET investing framework:
C = Catalyst for the Stock’s Movement
DuPont has so much news swirling around it that it’s difficult to establish a clear idea on which way this company is headed. On the positive side, 2012 earnings are expected to come in on the high end of the original forecast, up to $1 billion will be used to repurchase shares, and we should see earnings growth in 2013 thanks mostly to agricultural investments. DuPont has also been aggressive recently. Through Verdezyne Inc, DuPont has purchased the rights to an enzyme technology that converts sugar into fuels and chemicals. DuPont also broke ground on the world’s largest cellulosic biorefinery. Then there’s the 3.90 percent yield, which should please any investor.
On the negative side, DuPont has been cutting costs in Europe due to weakness in the region, pests have been eating their way through profits, Monsanto (NYSE:MON) won a $1 billion lawsuit against them for patent infringement, and they have been using a lot of debt to assist cash flow over the past few years.
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Jim Cramer recently stated that DuPont is a potential buyer for Mine Safety Appliances (NYSE:MSA). Jim Cramer gets a bad rap from the public, mostly thanks to the financial crisis of 2008. Anyone in his position would have experienced the same response. Cramer is actually one of the smartest people on Wall Street. However, there are two problems with his prediction. One, he mentioned the potential of this acquisition on his show, which has increased the stock price for Mine Safety Appliances and made it less appealing to any potential buyer. Two, DuPont is suffering from cash problems at the moment and isn’t likely to embark on such an adventure.
Now let’s take a look at some important numbers.