Editor's Note: This was sent to subscribers of Action Alerts PLUS on April 29 at 11:32 a.m. EDT.
popped more than 13% this morning after reporting first-quarter earnings and offering second-quarter guidance that were higher than expected. I'm restricted from trading the stock today, but am alerting you readers that I'd be selling my final 1,000 shares here around $53.85 if I could.
The fact is that management has little visibility in its own business. I first bought Eastman in late January following a profit warning, and the company raised guidance just five weeks later. So, forgive me if I have little faith in the sustainability of this morning's "blowout" numbers.
Even though capacity hasn't been able to keep pace with demand in the chemical business, I believe higher interest rates and commodity costs will weigh on growth forecasts across the globe. This means that peak chemical earnings will be lower and occur sooner than Eastman's current share price suggests.
At the time of publication, Cramer was long Eastman Chemical.
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