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Today I have been focusing on stocks and limited partnerships in the chemicals space. I already wrote a Buzz & Banter post
about Eastman Chemical
(NYSE:EMN) last month, but I wanted to throw in another idea that I see. I recommended Eastman Chemical because it has had income growth 40% per year, has operating margins of 20%, and a return on equity of 35%. Plus, Eastman's chart looked good technically.
(NYSE:PDH) is a company that breaks propane into propylene and hydrogen and sells both as commercial chemicals. From a fundamental perspective, the company is a limited partnership, and because of this, I look at the price-to-sales ratio, which is good at 2.4. Return on equity is over 40%, and margins are very healthy at over 25%. From a technical-analysis perspective, it looks to be starting a momentum phase. The stock has had a positive moving average cross, where the 50-day moving average moves over the 200-day moving average. The stocked also backtested its 50-day moving average and held, and now, PetroLogistics is holding higher above the old breakout consolidation area. This is how the majority of 18-month momentum moves start, so I am buying it here.
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