EMN - Eastman Chemical: Cyclical But Resilient

2024-04-25 03:34:14 ET

Summary

• Eastman Chemical has a well-diversified product portfolio, reducing concentration risk and spreading risk across economic cycles.
• The company is focused on innovation and upgrading its products to meet ESG compliance requirements and contribute to sustainability.
• Despite potential short-term volatility, Eastman Chemical has long-term potential due to its solid product portfolio, strong balance sheet, and prudent management approach.
• A strong balance sheet and focus on the organic growth insulates the company from a number of risks faced by other businesses in a macroeconomic downturn.

An essential characteristic of any diversified or actively managed portfolio is the presence of cyclical stocks at various points in market cycles. The structural volatility of the business cycles provides ample opportunity to generate a decent alpha. The following most desirable characteristics we look for in a cyclical stock are to ascertain the resilient nature of the business and management prudence to understand if the company has the right kind of foundations to withstand the cyclical headwinds....

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