Is Huntsman Corporation (HUN) A Good Stock To Buy Now?

Is HUN a bully banal to buy? We came crossed a bullish thesis on Huntsman Corporation connected Hidden Rock Capital's Newsletter's Substack by Hidden Rock Capital. In this article, we volition summarize the bulls' thesis connected HUN. Huntsman Corporation's stock was trading astatine $14.23 arsenic of June 8th. HUN's guardant P/E was 1.00k according to Yahoo Finance.

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Huntsman Corporation (HUN) is simply a specialty chemicals shaper operating crossed 3 halfway segments, including Polyurethanes utilized successful insulation, foam, sealants, and operation applications, Performance Products serving industrial, automotive, and electronics extremity markets, and Advanced Materials focused connected high-performance adhesives, composites, and coatings.

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The institution has faced a prolonged cyclical downturn, with its banal declining much than 50% implicit the past 5 years arsenic anemic end-market demand, post-COVID inventory destocking, and important caller capableness additions from China and the Middle East person weighed connected pricing and margins crossed the chemicals industry. Despite these headwinds, Huntsman's underlying concern exemplary remains structurally intact, with its diversified vulnerability crossed concern worth chains and historically resilient currency procreation done the cycle.

The concern lawsuit centers connected the utmost cyclicality of earnings, wherever Huntsman's adjusted EBITDA has fluctuated sharply crossed aggregate concern cycles, including beardown roar periods successful 2016–2018 and 2021–2022, and weaker downturns successful 2019–2020 and the ongoing post-2023 trough.

Over the past decade, the institution has inactive averaged astir $800–$900 cardinal successful mid-cycle adjusted EBITDA, suggesting existent results bespeak cyclical compression alternatively than semipermanent deterioration. This normalization supports a presumption that net are good beneath potential, with important embedded operating leverage if planetary concern request stabilizes and supply-demand conditions tighten.

Applying a mid-cycle valuation model utilizing an 8–10x EV/EBITDA multiple, successful enactment with humanities specialty chemic marketplace ranges, implies a just worth of astir $30–$40 per share. This represents a imaginable upside of astir 3x from the existent ~$13 stock price, highlighting a compelling risk-reward skew. In a betterment script wherever volumes normalize and pricing powerfulness improves, Huntsman could acquisition some net enlargement and aggregate rerating, positioning the banal arsenic a high-beta cyclical betterment accidental with meaningful upside optionality from mean reversion successful planetary chemic markets.