8 Stocks on Jim Cramer’s Radar

4. LyondellBasell Industries N.V. (NYSE:LYB)

Number of Hedge Fund Holders: 38

Cramer expressed hesitation about chemical companies like LyondellBasell Industries N.V. (NYSE:LYB) having ‘similarly high yields” and remarked:

“Okay, I can’t say it’s necessarily safe that all the chemical companies have similarly high yields. A lot of them are related to China and China weakness. And I think each one has to be explored on its own and that… if this cycle stays bad and the Fed doesn’t cut rates quickly enough, a lot of these companies may end up to be, let’s say dicier than you’d like to be. How about that? I wanna be polite about it.”

LyondellBasell (NYSE:LYB) is a prominent global player in the production of petrochemicals, polymers, and fuels, serving a broad range of industries. The stock has a yield of 7.18% at the time of writing on December 27, which is up from the 5.62% yield it had when Cramer last talked about it in October.

As discussed in our article, Jim Cramer’s Exclusive List of 9 YEV Stocks, at the time, Cramer noted that the stock, like others in its industry, follows a cyclical pattern, performing well during strong economic periods but struggling during downturns. This cyclical nature explains why the stock has lagged this year due to broader economic challenges. He commented:

“Until very recently, the two largest economies of the world, the United States and China were both deteriorating. But think about what’s happened just in the past few weeks. First, the Fed officially kicked off a new easing cycle, starting with that double rate cut I just mentioned. And then there’s a clear consensus that we are going to get several more rate cuts done before the Fed is finished…

What really matters, though, is that the general direction of interest rates is lower, which means the Fed is your friend. Don’t fight the Fed. At moments like this, the textbook cycle stocks tend to become big winners.”

LyondellBasell (NYSE:LYB) generated $3.4 billion in cash from operations over the past year, with a 77% conversion rate of EBITDA into cash, close to its 80% target. Despite facing challenging market conditions that impacted its third-quarter cash generation, the company expects an improvement in the fourth quarter due to lower global interest rates and economic stimulus measures in China.

Additionally, the company is focusing on profitability through its value enhancement program, expecting to unlock $600 million in recurring annual EBITDA by the end of this year and $400 million in 2024.