LXU - LSB Industries: An Undervalued Champion Of The Old Economy That Can Benefit From The Green Energy Transition

2024-04-05 19:40:43 ET

Summary

• LSB Industries is undervalued, as it trades at a significant discount to the replacement value of its assets.
• The company has several competitive advantages, including access to cheaper energy sources and tax incentives from the Inflation Reduction Act.
• Ammonia will play an important role in the green energy transition, for cleaner power generation, hydrogen transportation, and as a new form of fuel.
• I expect the share price to at least double over the next 2-3 years.

Introduction

LSB Industries ( LXU ) is a chemical manufacturing company that primarily produces ammonia and other nitrogen-based products for agricultural, mining, and industrial markets. The firm operates four manufacturing facilities strategically located across Alabama, Arkansas, Oklahoma, and Texas, with a medium-term target annual production capacity of around 900,000 metric tons of ammonia. It represents the sole publicly traded ammonia pureplay in North America....

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