Essays on Investment Analysis (portfolio Stocks Of U.S And Japan) Assignment

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Dow Chemical companyThe company is a multinational corporation operating out of the United States of America and since 2007, has gained the status of the second largest chemical manufacturer globally. The company is known to the backbone of the chemical industry as a major portion of their chemical production is used by other companies and not by the end user. This has been the major strength of the company since 2005 and the management has been struggling hard to retain their grasp on the mainstream Business to Business (B2B) relationships. However, the direct consumption of their products in the consumer market is widely recognised as well with the extensive use of their products in Human and Animal health sector and other consumer products. Ever since its conception in 1897, the company has been known for its innovation in the chemical industry, which started off with the founder inventing a new method to extract Bromine.

The company’s recent figures have grown exponentially and it now employs about fifty thousand people with an average yearly spending on one billion dollars on research and development (R& D) which has enabled it to expand into agricultural and plastic products and services as well.

These diversifications have boosted the yearly sales of the company to fifty four billion dollars through their customers based that is spread in one hundred and sixty companies worldwide. Because of these innovations, the stock trade for Dow has been consistent over the past five years and the company has seen incremental growth and positive returns. Key reasons for selection: The company has been experiencing major breakthroughs in the consumer, B2B and global organisations over the last two years.

Net income of the company has been rising at a rapid rate and has seen a jump of around 60% in the preceding years. The growth of the company has been also linked to the vertical integration that the company has taken up to make Dow a self-sustainable entity in the market and diversify its product line up. These factors have made Dow compete and excel in the globalized environment where it has established strategic production facilities to match the competition in labour and human capital costs.

The company has also started many projects in Middle east and Asia with the extensive development in Kuwait for a large production facility for ethylene. This is projected to complete in 2008 and will further increase the revenues and income of the company and will push the stock prices up in the market. Furthermore, Dow is also using its global scale to target Oman for its polyethylene production and is collaborating in China for improvements in production in olefins. Expansions in India and other parts of Asia are under way as well. Even though these ventures may take up huge capital resources, but Dow has strategically planned all investments in its expansion to structure an asset-light approach where it has been able to maintain a steady cash flow in the business by selling stocks of its existing concerns and using that revenue to finance new developments.

All of these factors have been taken into account to trade in stocks of Dow to have a secure pawn in stock trades which is assessed to yield positive returns and increase its stock value which may cover up for any losses that may be incurred on any other stock option that may be seen as more risky.

Over the period of analysis and monitoring the stock, Dow has showed an average gain of 10% in its stock prices and is hence a good long-term investment in the stock market.

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