LyondellBasell Industries N.V. (LYB): A Bull Case Theory

We came across a bullish thesis on LyondellBasell Industries N.V.  on Lasse’s Substack by Lasse. In this article, we will summarize the bulls’ thesis on LYB. LyondellBasell Industries N.V. 's share was trading at $54.19 as of September 3^rd. LYB’s trailing and forward P/E were 115.30 and 11.40, respectively according to Yahoo Finance.

LyondellBasell (LYB), a top-three global producer of polyethylene and polypropylene, benefits from being one of the lowest-cost operators in North America due to ethane sourced from shale gas. At its current price of $49, the market is discounting a prolonged period of depressed earnings, but history suggests spreads and utilization rates eventually revert to the mean. This mispricing provides a wide margin of safety, further supported by an attractive 11% dividend yield and several identifiable catalysts.

The company generates about 40% of its revenue from Olefins & Polyolefins (O&P) in the Americas, where cheap ethane underpins strong cost advantages. Another 25% comes from O&P in Europe and Asia, which, despite higher feedstock costs, benefits from proximity to regional demand and potential political catalysts. Intermediates & Derivatives contribute 20% of sales, led by the world’s largest propylene oxide and tertiary butyl alcohol (PO/TBA) facility in Texas, which provides steady margins, while the remaining 15% is derived from Advanced Polymer Solutions.

Although global polyethylene oversupply has weighed heavily on margins, with Northeast Asia PE-naphtha spreads running at roughly half their historical average, LYB’s U.S. ethane-based cost position remains firmly in the first quartile. Management has operated polyolefins at about 80% utilization to preserve value, and as industry rationalization and demand recovery materialize into 2026–27, spreads and utilization should normalize.

With a valuation of just 4.5x EV/EBITDA and 0.4x sales, plus resilience from its PO/TBA and APS segments, LYB offers compelling upside. A sale of European assets could unlock $1 billion for buybacks. In a bull case, shares could reach $117 (+150% with dividends), while the base case implies $84 (+83%). Even in the bear case at $39, downside is limited if dividends hold. LYB is best accumulated now and added on weakness, with potential for significant upside as spreads and utilization recover.

Previously we covered a bullish thesis on Eastman Chemical Company (EMN) by Necessary-Damage5658 in November 2024, which highlighted the company’s ability to gain share from export restrictions favoring compliant suppliers. The company’s stock price has depreciated approximately by 33% since our coverage. This is because the thesis didn’t play out amid weaker demand. The thesis still stands as compliance-driven trends support Eastman. Lasse shares a similar but emphasizes on LyondellBasell’s cost advantage and catalysts.

LyondellBasell Industries N.V.  is not on our list of the 30 Most Popular Stocks Among Hedge Funds. As per our database, 38 hedge fund portfolios held LYB at the end of the first quarter which was 46 in the previous quarter. While we acknowledge the potential of LYB as an investment, we believe certain AI stocks offer greater upside potential and carry less downside risk. If you're looking for an extremely undervalued AI stock that also stands to benefit significantly from Trump-era tariffs and the onshoring trend, see our free report on the best short-term AI stock.

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Disclosure: None.