2023-04-06 06:48:00 ET
Stocks get cheap for a reason -- and in the case of Berkshire Hathaway holdings Celanese (NYSE: CE) and UPS (NYSE: UPS), I think that reason comes down to fear. The market is worried about both companies' near-term prospects in 2023. However, if you can look beyond the potential for bad news in the near term, both stocks look like excellent long-term values. Here's why.
There are two interconnected things the market is worrying about with Celanese right now. The first is the company's earnings outlook in 2023, and the second is that Celanese completed an $11 billion acquisition of DuPont's former mobility and materials business in late 2022. Loading up on debt to make an acquisition just as the economy is slowing is not usually good news. Moreover, the sector relies on economic growth for demand for its end products.
Celanese is not a household name, even though its products are found in most households. It's a leading producer of engineered polymers and acetyl products -- intermediate chemicals used in a wide range of applications including consumer products, paints, automotives, food & beverages, construction products, and textiles. The broad exposure means its sales will always rely on economic growth and consequent demand for intermediate chemicals and materials.
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