Summary
- DuPont reported fourth quarter earnings before the market opened today.
- The main takeaway was that the strengthening US Dollar hurt results.
- However, in the long run, currency effects should cancel out and are irrelevant for the investment thesis.
- Progress in terms of cutting costs and share buybacks in 2015 further support my investment thesis.
- Chemicals businesses are a Strong Buy, and so is DuPont.
Now that the United States benefits from strong economic
growth, and the Federal Reserve is set to increase interest rates in the
near future, both of which are very (net) positive things for stocks,
investors turn their attention to forex rates. The US Dollar
strengthened meaningfully compared to other currencies over the last
couple of months and the Euro in particular took a hit: The Euro buys
just US-$1.13 today whereas just six months ago the Euro bought about
US-$1.34. That dramatic change in exchange rates is having an impact on
companies with internationally orientated businesses, like
E. I. du Pont de Nemours and Company (NYSE:
DD).
Though all the attention is now on the strengthening Dollar, I believe
that the effects of better economic growth outweigh the drawbacks from a
stronger Dollar.
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