Today, we’re looking at Dow Jones component E.I. du Pont de Nemours & Company — or, if you’re looking for something a little more familiar, DuPont (NYSE:DD).

Readers should know that I hold a chemistry degree from Cornell University and I know a lot about chemicals. That doesn’t mean I know a whole lot about chemical companies, though, so I’m learning along with you. We all know DuPont means chemicals, but you’ll be amazed to learn exactly how this translates into products. DuPont has six segments. Here’s a brief overview of what they all do (prepare to be surprised):

The Agriculture & Nutrition segment makes seeds, grains, proteins and pesticides. The Electronics & Communications segment supplies materials and systems for printing and electronics. The Performance Chemicals segment offers specialty and industrial chemicals for many industries. The Performance Coatings & Materials segment supplies coatings and materials for automakers and parts, as well as for electrical, electronics, packaging, construction, oil, photovoltaics, aerospace, chemical processing and consumer durable goods. The Safety & Protection segment offers solid materials for all major industries. The Pharmaceuticals segment collaborates on antihypertensive drugs.

Who knew?

The key driving factor for DuPont is the economy. The advantage DuPont has in this regard is it provides its products to numerous industries that might not be as economically sensitive. So some areas might get hit hard while others do fine. DuPont also has the “boring stock” element at work: It’s not a sexy company, so it sometimes seems like the market is overlooking all the great things DuPont does. Which means the stock might find itself at inexplicable discounts at times.

Right now, stock analysts looking out five years on DuPont see annualized earnings growth at 10.3%. At a stock price of $42, on FY 2011 earnings of $3.99, the stock presently trades at a P/E of 10.5 — exactly the same as its long-term growth rate. Dow Chemical (NYSE:DOW) is the closest competitor, and it trades a similar P/E of 11.7.

DuPont’s financials are exactly what you’d expect from a company that has a very long operating history and is classified as a stalwart. The company carries $2.5 billion in cash and $12.5 billion in debt, with interest running about 6% annually. Trailing 12-month cash flow was $5.5 billion. The company also had 3.5 times the amount of free cash flow necessary to pay its 4.1% dividend. It is comforting to see all that free cash flow, and investors should note that the company even was generating $3.5 billion in free cash flow during the height of the financial crisis.

Conclusion

DuPont’s history and solid free cash flow convince me to put a slight premium on its P/E valuation. If we put an 12 P/E on DuPont, then on projected 2015 earnings of $6.09 per share — and factoring in 4.1% compounded dividend yield reinvested — we get a price target of $87. That’s a solid double from these levels.

• I believe DuPont is a buy for regular accounts.
• I believe DuPont is a buy for retirement accounts.

As of this writing, Lawrence Meyers did not own a position in any of the aforementioned stocks.