An improving economy needs chemicals

As the worldwide recession begins to slow, chemical companies should benefit

By Jim Van Meerten Dec 4, 2009 2:21PM
I had some room in my Wall Street Survivor portfolio, so I used BarChart to screen for stocks hitting new highs recently and then sorted for ones hitting new highs the most consistently.

Huntsman (HUN) came in near the top of the list after I screened for some of my other criteria. HUN is a manufacturer of differentiated and commodity chemical products for industrial and consumer applications. It is worldwide, so it should benefit as the global recession comes to a turn.

Huntsman has hit new highs in 15 of the last 20 trading sessions and five for five in the last week. There has been a 39.32% price appreciation in the last 65 days. BarChart's 13 technical indicators all have buy signals for a 100% buy recommendation.

The five Wall Street analysts who follow the stock look for an 11% increase in sales and a whopping 112.7% increase in EPS. Four of the analysts have strong holds and the only sell is very old and I think needs to be revisited.

I always look at other sites to see if others confirm or disagree with my screening and research. On Wall Street Survivor, Mark's Check list has a Survivor Sentiment of 5 for 5 and a technical rating of 5 for 5 also.

On Motley Fool CAPS the members vote that the stock will out perform the market 518 to 26 with the All Stars voting 230 to 5. Motley Fool has some favorite Wall Street columnists they follow and they say the Wall Street guys like it 4 to 2. One of the dissenters is Jim Cramer, and the stock has gone up 272.20% since he gave a sell signal.

Remember my three main criteria hurdles:
  • The stock must hit new highs better than 50% of the time and have a technical indicator rating of more than 80%
  • Although I don't have much faith in the Wall Street analysts forecasts if they have sell ratings out there then a lot of brokers are calling clients soliciting sell - No Wall Street trash talking
  • Do other rating sites agree with me? If they don't I might have missed something.

Recommendation: I'm adding Huntsman to my Wall Street Survivor portfolio for the reasons above. It's selling around 10.50 and I think a protective stop loss of no lower than 9 is warranted.

 

Disclosure: I have no positions in any of my Wall Street Survivor holdings at the time of publication.

 

Jim Van Meerten is an investor who writes about financial matters here and on Financial Tides. Please leave a comment below or email FinancialTides@gmail.com.

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