Westlake Chemical (WLK) operates in the chemicals industry, manufacturing a range of products including polyethylene, styrene, and PVC resin. In the last 4 quarters, WLK has reported revenue of $10.4B, $11.8B, $11.2B, and $12.1B, with corresponding net income of $1.2B, $2.0B, $1.8B, and $2.1B. WLK's consistent ability to maintain net margins around 11-13% over the past year, despite inflationary pressures, indicates the company has significant pricing power and can effectively pass cost increases to customers. WLK's return on invested capital (ROIC) has averaged 15.7% over the last 4 quarters, suggesting the company is generating strong returns on its capital deployment. WLK's combination of high and stable margins, solid ROIC, and favorable industry supply/demand dynamics position the company well to continue expanding profitability through further pricing actions and operational optimization. Given WLK's demonstrated pricing power, I expect the company to continue expanding its net margins by at least 100 basis points over the next 6 months, driven by its ability to pass through costs and benefit from strong demand in its key end markets. This margin expansion, coupled with revenue growth, should drive 15-20% EPS growth during that time period. Based on WLK's fundamental quality, pricing flexibility, and positive industry outlook, I believe the stock is attractively valued and warrants a buy rating with a 12-month price target of $145, implying 20% upside from the current price of $121.

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