Strangely, Mr. Market has taken notice of one of the oldest name in modern business, DuPont de Nemours Inc. (NYSE: DD).
The Q.ai artificial intelligence listed DuPont de Nemours (DD) as a trending stock on 6 July 2021, Forbes reports. “DuPont de Nemours, Inc nudged up 0.24% on Friday to $78.79 per share on volume of two million trades,” Q.ai writes on Forbes.
“The stock is trending between its 10- and 22-day price averages, though it’s up around 10.8% year-to-date,” Q.ai writes on Forbes. “Currently, DuPont is trading at 19.9 times forward earnings.”
DuPont Makes the Building Blocks of Modern Civilization
DuPont de Nemours Inc. (DD) is the successor company to E. I. du Pont de Nemours and Company or DuPont. DuPont began as a gunpowder mill on Brandywine Creek near Wilmington, Delaware, in 1802.
During the 19th Century, DuPont became America’s first large defense contractor by supplying gunpowder to the military. In the 20th Century, DuPont diversified into plastics, textiles, paints, film, and materials.
During the 20th Century, DuPont developed many revolutionary products. Those products include; Cellophane, Nylon, Mylar, Tedlar, Tyvek, Kevlar, Nomex, Styrofoam, and Thermax. Hence, DuPont makes many of the building blocks of modern civilization.
Conversely, today’s DuPont de Nemours, Inc. (DD) began in 2017 with the spinoff of Dow Chemical from E. I. du Pont de Nemours and Company. Today’s DuPont concentrates on materials such as Tyvek and Kevlar.
What Value does DuPont have?
Consequently, many people will view DuPont de Nemours (DD) as a value investment.
In particular, Mr. Market thinks DuPont offers more value. During the pandemic year, DD’s share price rose from $52.25 on 8 July 2020 to $78.48 on 8 July 2021. I think DuPont’s share price is rising because many investors are seeking money-making basic industrial stocks.
DuPont de Nemours lost in the pandemic year. For instance, its cash and short-term investments grew from $1.782 billion on 31 March 2020 to $6.399 billion on 31 March 2021. Conversely, the Total Assets fell from $67.987 billion on 31 March 2020 to $47.804 billion on 31 March 2021.
How Much Money does DuPont de Nemours Inc. Make?
Conversely, DuPont de Nemours, Inc. (DD) is making more money and fewer revenues.
For example, DuPont’s quarterly operating income grew from -$324 million on 31 March 2020 to $693 million on 31 March 2021. In contrast, the quarterly revenues fell from $5.221 billion on 31 March 2020 to $3.976 billion on 31 March 2021. Additionally, the quarterly gross profit fell from $1.37 billion on 31 March 2020 to $1.297 billion on 31 March 2021.
Notably, the quarterly operating cash flow fell from $718 million on 31 March 2020 to $378 million on March 31, 2021. In contrast, the quarterly ending cash flow rose from $1.782 billion on 31 March 2020 to $4.398 billion on 31 March 2021.
The pandemic forced DuPont to borrow enormous amounts of money. For example, DuPont reported quarterly financing cash flows of $4.78 billion on 30 September 2020 and $1.394 billion on 30 June 2020.
However, DuPont’s Total Debt fell from $18.13 billion on 31 March 2020 to $13.04 billion on 31 March 2021. Thus, DuPont made less money, generated less revenue, and paid more during the pandemic. For example, DuPont reported a quarterly financing cash flow of -$2.458 billion on 31 March 2021.
Is DuPont a Growth Stock?
I think DuPont (DD) has considerable growth potential. In particular, growth in construction could benefit DuPont.
Unfortunately, data shows construction may not recover. For example, Dodge Data predicts the number of US construction starts will rise 4% in 2021, Construction Pros reports. However, the number of US construction starts fell by 9% in 2020. Thus, the number of US construction start is 5% lower than in 2019.
Similarly, commercial construction starts fell by 24% in 2020 and could grow by 6% in 2020, Construction Pros estimates. The only real growth is in warehouse and fulfillment center starts which could rise by 10% in 2021. Warehouses and fulfillment centers now make up 30% of commercial construction activity.
Will DuPont grow with e-commerce?
Thus, I predict the demand for construction materials will be far lower in 2021.
However, I think demand for packing materials such as Tyvek and Mylar will grow in 2021 because of the growth of e-commerce. To explain, they make many shipping bags and envelopes from Tyvek and protect many items with Mylar.
Demand for Mylar and Tyvek is rising. For example, FedEx’s annual package volume grew from 1.93 billion in 2016 to 3.13 billion in 2021, Statista estimates. Similarly, FedEx’s daily package delivery volume grew from 4.18 million in 2016 to 6.68 million in 2021, Statista estimates.
Given these realities, I think DuPont could experience enormous growth as Amazon (AMZN) and other e-commerce companies expand. As more people order everything on Amazon. There will be more demand for Tyvek and Myler, so DuPont could make more money from delivery.
Is DuPont de Nemours Inc. (DD) a good stock?
I consider DuPont de Nemours Inc. (NYSE: DD) a nice value investment with growth potential.
To explain, DuPont makes unsexy products for which there is an enormous and growing demand. Moreover, DuPont generates cash and pays an attractive dividend.
For instance, DuPont will pay a 30¢ quarterly dividend on 15 September 2021. That dividend has held steady for the past year. Overall, DuPont offered a forward annualized dividend of $1.20 and a dividend yield of 1.56% on 8 July 2021.
If you are seeking a dividend-paying industrial stock that could experience enormous growth in the 21st Century, DuPont de Nemours is worth a look.
Originally published at https://marketmadhouse.com on July 9, 2021.
