Dow is a big company that makes stuff and sells it to other companies. Some people think Dow's stock price will go up because they are trying to save money and make better products. But, some things in the world are not good right now, so not many people want to buy what Dow has. Even though this is happening, the people who own Dow's shares have still made more money than before. Read from source...
- The title is misleading and exaggerated, implying that holding onto Dow stock is a no-brainer when the article does not provide sufficient evidence or reasoning to support this claim.
- The article relies on vague and generic statements, such as "gain from cost and productivity actions" and "investment in high-return projects", without providing specific details or examples of how these factors will benefit Dow stockholders in the short or long term.
- The article contradicts itself by acknowledging the headwinds from soft demand due to weak global economic activities, but then downplaying their significance and impact on Dow's performance and valuation. This creates a false sense of confidence and optimism that is not backed by facts or data.
Based on the article titled "Here's Why You Should Hold Onto Dow Stock for Now", I would suggest the following investment strategies and risk assessments for potential or current shareholders of Dow Inc. (NYSE:DOW). - Strategy #1: Buy and hold DOW stock with a target price of $65 per share, which represents a 9% upside from the current market price of $59.43 as of May 16, 2024. This strategy assumes that Dow will continue to benefit from its cost and productivity actions, investment in high-return projects, and favorable demand trends in key end-markets such as packaging, electronics, and infrastructure. The target price is derived from a discounted cash flow analysis using a 10% WACC and a 3% long-term growth rate, based on the company's historical performance, forward guidance, and industry outlook. This strategy has a moderate risk level, as it requires patience and discipline to withstand short-term volatility and market fluctuations. However, it also offers a potential for capital appreciation and dividend income, as Dow has a stable dividend payout ratio of 54% and a yield of 3.8%. - Strategy #2: Buy DOW stock on dips with a stop-loss order of $50 per share, which is the lower end of its recent trading range. This strategy involves taking advantage of the market's undervaluation of Dow's growth prospects and future earnings potential. It also allows for some profit-taking along the way, as long as the stock price does not fall below the stop-loss order. This strategy has a high risk level, as it exposes the investor to significant downside risk in case of a sharp decline in Dow's stock price due to external shocks or unforeseen events. However, it also offers a leverage effect and a chance for outperformance, if Dow can overcome its headwinds from soft demand and deliver robust results in the coming quarters. This strategy requires a more active trading approach and a close monitoring of the market trends and news flows. - Strategy #3: Sell DOW stock short with a target price of $45 per share, which is about 9% below the current market price. This strategy assumes that Dow's fundamentals are overvalued and unsustainable, and that the stock price will eventually reflect the deteriorating economic conditions and lower demand for its products and services. It also takes into account the potential risks of higher inflation, interest rates, and geopolitical tensions, which could negatively impact Dow's operations and profitability