November 20, 2011 in Business

Motley Fool: DuPont’s sales prove its stock is worth look

 

DuPont (NYSE: DD) CEO Ellen Kullman has done a yeoman’s job of guiding the company since she took its reins in 2008. In its last quarter, it earned $655 million, up from $367 million a year earlier. Revenue rose 32 percent to $9.2 billion, partly due to 15 percent higher local prices.

Geographically, sales rose by 23 percent in the U.S. and Canada; 40 percent in Europe, the Middle East and Africa; 29 percent in Asia and the Pacific; and 43 percent in Latin America.

Segment highlights include agriculture, up 41 percent; electronics and communications, up by 20 percent; and nutrition and health, up by 178 percent.

Kullman noted: “Despite turbulent global economic and market conditions, we delivered solid growth through innovative products and process technologies, disciplined execution and continued productivity gains.” She has also pointed out the company’s focus on innovation, as it has developed new products that “delivered higher yields, healthier and better food, more efficient solar cells, more energy-efficient vehicles, and new applications for personal protection.”

Nearly a third of 2010 revenue was generated by relatively new products.

Investors should keep an eye on DuPont, given its lengthening string of successful quarters and its propensity for innovation. Its dividend yield was recently a healthy 3.6 percent, and its price-to-earnings (P/E) ratio near 13, below its five-year average.

Ask the Fool

Q: What should I do if I want to invest in an index fund, but I don’t see any among the funds I can invest in through my 401(k) plan? – B.P., Portland, Maine

A: You’re smart to look for an index fund, as ones based on broad market indexes (such as the S&P 500 or the total market) have trounced most stock mutual funds over long periods. They also tend to feature lower fees. If you (and perhaps some co-workers, as well) visit your company’s 401(k) administrator and ask for an index fund or two, you might get them. Learn more about maximizing your 401(k) at www.fool.com/retirement.

Meanwhile, you can also invest in index funds on your own, through your brokerage or mutual fund companies’ websites. Vanguard.com, for example, is home to many low-cost index funds, such as the Vanguard Total Stock Market Index Fund (ticker: VTSMX).

Exchange-traded funds (ETFs) can also serve you well, trading like stocks and tracking various indexes. Consider the SPDR S&P 500 (SPY), Vanguard Total Stock Market (VTI) or the Vanguard Total Bond Market (BND).

My dumbest investment

My dumbest investment was putting money into managed accounts, in options and currencies. They took my $5,000 and ran it down to $150 in one year. And the managers even withheld the balance until I raised hell. I played with my own accounts at the same time and made money. – R.J., online

The Fool responds: First off, don’t think about your own investing as “playing.” It’s serious business, though it can certainly be fun, too. Managed accounts have grown in popularity, luring investors with the proposition that their money will be pooled with that of others and then professionally managed. Many people think they should be using options and making bets on currencies, so they welcome the chance to have others do so for them.

You can prosper without ever going near such investments, though. That’s good, as they can be extremely risky, and many professional money managers don’t have great records. Consider simply investing in some broad-market index funds instead, or aim to hold stock in some strong and growing companies for the long run. That’s how many wealthy people have made their money.


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