Yes, I know it's not 1967. The Graduate is relegated to rerun heaven. But while reading the third-quarter results released Thursday from Motley Fool Income Investor recommendation Dow Chemical (NYSE:DOW), the movie line "There's a great future in plastics" came to mind.

The news is surprisingly good, even in the aftermath of hurricanes Katrina and Rita. But after remembering that this is a large, diversified, international company, the results were still amazing. Sales were up 12% and net income rose 30% over the comparable quarter last year. Get this: In three quarters, Dow Chemical has already earned more than it did in any previous year.

The greatest sales growth was in Europe -- up 17%. The rest of the world checked in with a 9% gain.

The performance plastic segment led the charge, up 22%. Volume increased 5% and prices rose 17%. Talk about pricing power! That's good, because rising raw material and energy prices really wallop the expense line at a chemical company.

The good news extended all the way to the balance sheet. The company continued its drive to lower its net debt (debt minus cash) as a percentage of capital. In one year, it has fallen from 46% to 32%. In a capital-intensive industry like chemicals, Dow Chemical has lowered its debt level to what could be considered somewhat conservative levels. For an economically sensitive company like Dow Chemical, where it's either feast or famine, paying off debts while the cash is rolling in makes long-term sense.

All the good news is not reflected in the stock price. The stock, trading at 10.6 times this year's estimated earnings (and only 8.3 times 2006 estimates), is much closer to its low price than the high.

One reason for the stock price, besides the company's economic sensitivity, is that analysts project only 8% annual growth for the next five years. But the 3.1% dividend yield is high enough to cushion the stock from falling too far in the near future.

Dow Chemical is underpriced compared with its peers. DuPont (NYSE:DD), which is also experiencing strong earnings growth, is priced at 14.2 times 2006 earnings, and its earnings are projected to compound at 10%. BASF (NYSE:BF) trades at 10.1 times estimated earnings and sports the same 8% growth rate that is expected at Dow.

Performance plastics is the front-runner today. But there is a lot more to Dow Chemical for long-term investors to investigate.

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Fool contributor W.D. Crotty does not own shares in any of the companies mentioned. Click here to see The Motley Fool's disclosure policy.