Dow Chemical (DOW)

Dow Chemical (DOW) had a near death experience in its takeover of Rohm and Haas last year. They offered a rich premium and committed to significant debt as the economy was imploding. They desperately tried to extricate themselves from the deal but were legally bound to it.

Turns out that was a good thing.

Dow's stock price has about quintupled off the market lows. And recently they announced the consolidation of the Rohm buy is going so well they expect FY '12 EPS of $4-4.50 per share, well above analyst views of $2.50. The increased earnings power means that DOW is trading at little more than 6x's 2 year forward estimates.

The stock gapped to new 52 week highs on the news but has since eased back to the 50 MA where it has found support.

We like it here as it gaps modestly higher this morning. We'll use $26 as our stop. Our objective is to treat this as a core holding in a recovering economy.