November 2, 2023

BASF: a sustainable, yet a bit risky chemical producer

BASF: a sustainable, yet a bit risky chemical producer

Our present and future need to be sustainable if we want to keep our planet livable in the following decades or centuries. This is why we always endorse companies that either have a good environmental impact or are seriously trying to improve their production processes. On top of that, BASF, the world's largest chemical producer based in Germany, also offers products and services that help their clients become more sustainable as well. Together with its good ranks, this is a key reason that we included it in one of our most recent Coffee Break Chats and added it to our Europe Value Wikifolio.

If individual stocks purchases aren't for you, take a look at the financial product traded on the SIX stock exchange: Obermatt Swiss Pearls Index ETP. It's made up of the 36 best performing Swiss stocks based solely on Obermatt's 360° View.

PRO: These three points speak for a buy:

  1. All Obermatt financial ranks are very good. Value is at 89, which means that BASF shares are cheaper than 89% of its direct competitors. The 360° View is also good at 76.
  2. They are committed to achieve net-zero emissions by 2050, which means that most of the production processes need to be rethought, as chemical production is very CO2 intensive. When also looking at other sustainability incentives they have in place, we believe this is a positive sign.
  3. BASF’s conventional products and services aside, their research and development across different industries makes very interesting and even futuristic solutions. For example, they have recently launched a material for sustainable rubber footwear.

CONTRA: These three points argue against it:

  1. A low (red) Sentiment Rank, with a special focus on the Opinions Change Rank which is 18, meaning that the analysts covering the company are changing their recommendation for the worse.
  2. Toxic gas leak in Ludwigshafen, Germany that happened just a couple of days ago makes us wonder if BASF’s safety and maintenance procedures are in place.
  3. The departing CEO wants to sell off several businesses worth billions of dollars due to lower performance in those sectors. They have already sold their polypropylene foam business to Knauf Industries.

We do believe in a sustainable future, so we decided to include BASF in our Europe Value Wikifolio despite some unfavorable recent events.

If you want to be part of the shaping of our portfolios, join the free Coffee Break Chats with the creator of the Obermatt Method Dr. Hermann J. Stern and other guest investors. You can share your ideas, discuss the stocks and learn about stock investing in the process.

We buy the stocks we discuss and openly publish the returns of our portfolio. That's how much we believe in our stock research. Subscribe to the top 10 stocks for 100 markets conveniently by e-mail.

Get stock news now
Analysis drives Performance