When I sold the shares of BHP Billiton, I sold my only basic materials stock.
Almost two years ago, I analyzed the industrial gases sub sector. It was too expensive back then, and I wish to look at the sub sector again.
Air products and Chemicals is a dominant company in this sector, and I will analyze it after the spinoff of the electronic materials business last October.
I used to own BHP Billiton (NYSE:BBL) in my portfolio until it cut its dividend. For me, a dividend cut is a sign that the management isn’t responsible enough to plan ahead in a conservative manner. While BBL was my only holding in the basic materials sector, I analyzed the sub sector of industrial gases almost two years ago. I always look for decent companies in the basic materials sector, and when I find one, I will consider it for my portfolio.
Almost two years ago, when I looked at the sector, there were more companies in it. The consolidation trend that started over a decade ago accelerated, and the whole market is very different now. The valuation was very high back then, but I wish to look at these companies again right now.
Air Products and Chemicals (NYSE:APD) made a major spinoff last October, and major events are always worth tracking. Sometimes, companies trade at an awkward valuation after a spinoff, because it takes time for the market to adapt to the new company. I will analyze APD in accordance to my thesis, using my flowchart that you can see below.