We recently published a list of 11 Undervalued Chemical Stocks to Buy Now. In this article, we are going to take a look at where Dow Inc. (NYSE:DOW) stands against other undervalued chemical stocks to buy now.
President Trump is looking to place 25% tariffs on goods from Canada and Mexico and this could negatively influence US industries and critical sectors beyond just autos. According to a report by CNBC in January 2025 by Lori Ann LaRocco, Canada is the largest partner with the US for critical chemicals.
READ ALSO: 15 Best EV Stocks To Buy According to Billionaires and 10 Best Stocks Under $10 to Buy Now.
The US chemicals industry also exports a huge amount of products to Canada. In 2023, US firms sold over $28 billion in chemicals to Canadian customers. On the other hand, Canadian partners export approximately $25 billion in chemicals to the US annually, as per the American Chemistry Council.
Texas, California, Louisiana, North Carolina, Illinois, Ohio, Indiana, New York, Pennsylvania, and Iowa are the top chemical-producing states and they account for about 66% of total US chemical production while the rest of the chemicals are imported. According to the American Chemical Council, Canada is the leading source of chemical imports to the US and accounted for 18.1% of the total chemical imports in 2023. Canada is followed by China and South Korea.
Eric Byer, CEO of the Alliance for Chemical Distribution, pointed out that if there is a trade war between Canada and the US, the price of critical chemicals could lead to inflationary pressures on US consumers and industries. According to Byer, Canada exports approximately 80% of the chlorine used in disinfecting drinking water for the West Coast states. He also pointed out that the US exports large amounts of phenol to Canada for use in the wood products industry. Some of that treated lumber is then also exported back into the US from Canada for domestic consumption and home construction purposes.
The US-Canada chemical trade relationship supports other industries as well and disruption of this trade between the two countries could have far-reaching consequences.
Our Methodology
To compile our list of the 11 undervalued chemical stocks to buy now, we looked for the largest chemical companies. We reviewed our own rankings, financial media reports, ETFs, and various online resources to compile a list of the best chemical stocks. To find undervalued chemical stocks, we narrowed down our selection by looking for stocks trading at under 20 times their forward earnings as of March 28, 2025. Next, we focused on the top 11 undervalued chemical stocks most favored by institutional investors. Data for the hedge fund sentiment surrounding each stock was taken from Insider Monkey’s Q4 2024 database of more than 1,000 elite hedge funds. Finally, the 11 undervalued chemical stocks to buy were ranked in ascending order based on the number of hedge funds holding stakes in them as of Q4 2024.
Why do we care about what hedge funds do? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 373.4% since May 2014, beating its benchmark by 218 percentage points (see more details here).
A technician operating state of the art machines manufacturing specialized packaging materials.
Dow Inc. (NYSE:DOW)
Forward P/E: 17.18
Number of Hedge Fund Holders: 48
Dow Inc. (NYSE:DOW) is an American multinational chemical and materials science company. It is one of the world’s leading suppliers of chemicals and plastics. The company has manufacturing sites in 30 countries and serves customers in high-growth markets such as packaging, infrastructure, mobility, and consumer applications. Dow Inc. (NYSE:DOW) ranks among the best chemical stocks to buy.
The company is currently shifting its focus on maintaining long-term competitiveness as it navigates through the ongoing slower-than-expected macroeconomic recovery. On January 30, Dow Inc. (NYSE:DOW) announced plans to achieve $1 billion in cost savings on an annual run-rate basis. Through targeted actions, the company will cut direct expenses by $500 million to $700 million, primarily focusing on purchased services and third-party contract labor. Additionally, Dow Inc. (NYSE:DOW) will decrease labor costs through a workforce reduction of about 1,500 positions globally. These initiatives will align spending with the current economic situation and improve Dow Inc.’s (NYSE:DOW) financial position.
Overall, DOW ranks 3rd on our list of undervalued chemical stocks to buy now. While we acknowledge the potential of DOW, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than DOW but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
READ NEXT: 20 Best AI Stocks To Buy Now and 30 Best Stocks to Buy Now According to Billionaires.
Disclosure: None. This article is originally published at Insider Monkey.
Hedge Fund Resource Center