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As part of an ongoing series, we will take a closer look at one of the stocks from our stock screeners, and dissect why it might be a deeply undervalued gem. The stock this week is:

Westlake Chemical Partners LP (WLKP)

Westlake Chemical Partners is a U.S.-based master limited partnership (MLP) that operates, acquires, and develops ethylene production facilities. The company primarily supports Westlake Corporation through long-term contracts, providing a steady revenue stream insulated from short-term commodity price swings.

As a niche player in the commodity chemicals space, Westlake Chemical Partners offers investors exposure to essential infrastructure with attractive yield characteristics.

What is IV/P (Intrinsic Value to Price)?

The IV/P indicator can tell you if a stock is a good deal based on how much value you’re getting for the price you pay.

The Calculation

It combines a stock’s earning power, growth potential, and what it’s returning to shareholders (via dividends and buybacks) to calculate its Implied Value — what the business is worth based on its fundamentals. The method to interpret this indicator is as follows:

• If IV/P is more than 1: You’re getting more value than you’re paying for — a potential bargain.
• If IV/P is less than 1 1: You’re paying more than the business is worth — possibly overvalued.

If IV/P is very high, it signals the stock might be trading at a deep discount.

IV/P for Westlake Chemical Partners: 1.70

Westlake Chemical Partners has an IV/P of 1.70, meaning the stock’s implied value is estimated to be 1.7 times greater than its recent price. Put simply: For every $1 you invest, you’re potentially getting $1.70 of value.

That indicates a modest but meaningful margin of safety — especially when combined with strong yield metrics.

Supporting Metrics

• Shareholder yield: 8.25%. This is entirely from dividends — signaling a consistent income stream for unitholders.
• Free Cash Flow yield: 46.10%. This is an exceptionally high FCF yield, signaling massive cash generation relative to the company's market cap.

Why Might Westlake Chemical Partners be Undervalued?

1. Limited investor coverage: As an MLP with a relatively small market cap (~$785 million), Westlake Chemical Partners may fly under the radar of larger institutional investors and funds.
2. Income vehicle stigma: MLPs are often seen as income-only plays, and some investors may overlook the impressive free cash flow generation and strategic positioning.
3. Commodity label confusion: While categorized under “commodity chemicals,” Westlake Chemical Partners’ long-term contract model reduces exposure to market volatility — which is a factor some investors may miss.

Conclusion

With an IV/P of 1.70, Westlake Chemical Partners LP appears moderately undervalued, particularly for income-seeking or value-oriented investors. Its strong cash generation, steady dividend payout, and niche positioning in a vital part of the chemical supply chain make it worth a closer look. While not a high-growth story, the company still offers reliability and value — a rare combination in today’s market.

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