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Now that August is in the books, let's look at where we are and update some of my previous thoughts:

In the call, the following exchange was had:

Jeffrey Zekauskas - JPMorgan:
"Good morning. On average shouldn't your raw material costs be down sequentially in the third quarter? Natural gas has gone from -- I don't know -- $12 to $9 and oil has come from $135 to $125?"

Let's look at the information gleamed from Dow chemical's (DOW) Q2's release and call and do a little projection for Q3.

In the call the following exchange was had:
Jeffrey Zekauskas - JPMorgan

Good morning. On average shouldn't your raw material costs be down sequentially in the third quarter? Natural gas has gone from -- I don't know -- $12 to $9 and oil has come from $135 to $125?

Yeah Jeff, this is Geoffrey here. Just to take oil, Brent crude average price as of this morning

So, after the news of the past couple days, I have added to the position in Dow Chemical (DOW). At prices averaging $32, even we tripled the position in Dow yesterday and today.

Current yield, 5.25% and rock solid safe. Think about it: Berkshire Hathaway's (BRK.A) Warren Buffett only got 8.5% on his $3 billion convertible and it is underwater if shares are under $41 and change (28% higher than today) in 5 years ($41 is the conversion price).

The Dow Chemical Company engages in the manufacture and sale of chemicals, plastic materials, agricultural, and other specialized products and services worldwide. The company operates in six segments: Performance Plastics, Performance Chemicals, Agricultural Sciences, Basic Plastics, Basic Chemicals, and Hydrocarbons and Energy. The Performance Plastics segment provides automotive products, building solutions, epoxy resins, intermediates and specialty resins, polyurethanes and polyurethane systems, specialty plastics and elastomers, and technology licensing and catalyst products. The Perfo

Filed under: Products and services, Dow Chemical (DOW), Stocks to Buy

This post is part of our Big Company, Small Town series, featuring large companies and the small towns in which they are headquartered.

The Dow Chemical (NYSE: DOW) is capitalized at about $40 billion dollars and produces a multitude of household and industrial products that probably touch most Americans lives in some way. It is the largest chemical company in the U.S. and number two worldwide (ahead of ExxonMobil and behind BASF), and it is also a leader in performance plastics.

On May 18, 1897, Dow Chemical incorporated, b

In part 4 we discuss areas of potential value for M&A.

Todd:
So, if there is no value in Ag, and no real value in the Petro- chemical sector now, where do you see value?

Andrew:
Well, great question. Firstly, the US economy, and the housing crisis leading to the credit issues leading to, if you like, the financial sector meltdown interestingly enough has not yet pitched profits in the economy in the main, apart from the banks and financial service companies. Main Street has survived the financial issues and the housing crisis pretty well. That means equity values have not come down so, one,

In part three we discuss Dow Ag and the agricultural sector in general including DuPont (DD) and Monsanto (MON).

Todd:
Roughly a third of earnings in the most recent quarter were Dow Ag. After you sell the commodity business, we are looking well in excess of that. I have not been able to find what percent of future earnings you expect them to be and what type of growth and how far out, as right now you are at about 20-25% annual EPS growth at Dow Ag. Going out 2009-2010 and beyond, to me 20% -25% EPS growth there seems sustainable if not surpassable. Accurate or not?

Andrew:
I think you are m

Dow Chemicals is a good stable company with no threat of having to cut it's dividend.

Plastic

Paints

Crop Seeds

Nothing wrong with this business platform