Get Ready to Light Up Your Watch List
John is a member of The Motley Fool Blog Network -- entries represent the personal opinion of the blogger and are not formally edited.
Dow Chemical (NYSE: DOW) has been down as of late because of falling demand for product early in the year and restructuring issues. Recently it found strong support after dropping about 18% toward the end of May. Bouncing off its 200 day moving average it might have found support and it is time to possibly look at the company for an entry point for a long term income investment. Looking for an entry point for longer term growth can be supported by watching how Dow continues to position itself for the future as the economy turns around.
Electronic Materials Expansion into the LED Market
Analysts continue to give a rosy outlook in a rise in LED usage across applications as LED lighting is going to lead the way. LED Lighting applications are expected to grow 27% through 2014 to estimated revenue of $12.7 billion. Involving itself in this growth, Dow bought Lightscape Materials. This investment enables it to expand into the phosphor technology market with its existing LED portfolio. The novel phosphor compositions developed by Lightscape Materials enable improved quality, reliability and output color of LED light-based systems
DuPont (NYSE: DD) a competitor, has been in the market for awhile. A couple years ago it was awarded a $2.25 million grant from the Department of Energy for a two-year project to develop a solid-state lighting source using low-cost organic light emitting diode (OLED) solution-processing manufacturing techniques. The benefits are seen through manufacturing large areas at low cost while delivering completely new, highly efficient lighting concepts.
Another company big in the LED market (but not a direct conglomerate competitor) is Cree Inc. (NASDAQ: CREE). It is expanding into emerging markets as it opening two new technology centers in China. The technology centers support demand for Cree products and services throughout China and demonstrate Cree’s commitment to accelerate broader market adoption of LED lighting.
Through Lightscape, Dow will be able to assist customers incorporate the advanced phosphors into their processes while it provides the necessary service and support. LED’s will be able to create a wide spectrum of white light, with the color tuned for the desired application. As applications become more sophisticated, consumers are going to expect these color applications and increased quality along the way.
AgroScience Division Expands in South America
Dow AgroSciences announced the launch of POWERCORE™ in Brazil to control major pests in corn. It will be the first product approved in Brazil with five genes stacked in corn. This is huge! It will be available for sale Fall 2012 in Brazil and Argentina. POWERCORE is expected to help increase yields by up to 10% depending upon weather and advances in crop levels.
It is in the Agro fields where all the money is right now. Even a competitor like Monsanto (NYSE: MON) has grown in this area. As the world’s largest seed company, its profits have exceeded analysts’ expectations because of rising sales in the U.S., Brazil and Eastern Europe. Insect-fighting corn seeds and herbicide-tolerant soybeans are exceeding projections as farmers are becoming more educated with the technology.
These are but two examples of how Dow Chemical is positioning itself for future growth. I cannot say 2012 is going to be a bullish year for the company, but if you are a long term investor, Dow is well managed with a dividend that exceeds 4% now—income investors take note! So I would say it is time to put this company on your watch list for a good time to enter.
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