E I Du Pont De Nemours and Co (NYSE:DD) — This widely diversified U.S manufacturer is not only the second-largest producer of chemicals but is also a major science and technology-based company.
Standard & Poor’s projects that the demand for agricultural products will have a large increase that will directly benefit DD’s global growth strategy, which includes a merger with Dow Chemical Co (NYSE:DOW). The merger, which is expected to yield $4 billion in synergies, pending approvals, is expected to be completed in August 2017.
The management of both companies is considering a possible post-merger “spin-off” into three separate companies, but no firm decision has been made on the proposal.
S&P increased their 12-month target by $2 to $90 and lifted their earnings per share for 2017 to $3.94 from $3.82. They cut their 2018 estimate by 4 cents to $4.25. Q1 EPS beat S&P’s estimate of $1.47, reporting $1.64. Higher operating margins were the focus of the positive quarterly result. DD shares pay an annual dividend of $1.52 for a yield of 2%.
DD stock is in a bull market despite a recent rounding top. That top appears to have been reversed yesterday when my CBR system flashed a buy signal exactly on the support line at $75.50. The line was constructed off of a series of daily highs in December 2016 and January 2017. High volume marks a broad period of accumulation that began in February when a breakout from a rectangle was preceded by a CBR buy signal off of the 200-day moving average (red line).
I believe that yesterday’s reversal marks an excellent opportunity for traders and investors to buy one of the world’s premier large-cap value companies at a reasonable discount. Thus, buy DD stock at $77 with a trading objective of $90.
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