Barclays on U.S. Chemicals: Gems of Chem - LYB vs. DOW...Is It Time To Swap?

August 30, 2012 4:30 PM EDT
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Price: $90.89 +1.26%

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Barclays on U.S. Chemicals: Gems of Chem - LYB vs. DOW

Analyst, Duffy Fischer, has gotten several inquiries regarding the possible move out of LyondellBasell (NYSE: LYB)(which has recently outperformed) and into Dow Chemical (NYSE: DOW).

Fischer simply said, "While we think both stocks have a good outlook over the next several years because the "cycle" is still in front of both we still believe LYB is the best risk/reward over the next 12 months."

The Barclays analyst also notes that LYB's move higher over DOW in the past year probably came from the company's stronger earnings and cash flow generation. Some additional reasons to name LYB as the best chemical stock story include: 1) Near trough in global ethylene chain - LYB's key product; 2) U.S. natural gas advantage
versus global oil provides a superior cost position; 3) LYB already gone through large positive mgmt and culture change; 4) Positive re-investment and free cash flow yield

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