After a challenging two months in the Energy & Materials sectors there are numerous bargains in the space. One fast growing firm with low valuations worth serious consideration is Ashland (ASH).
Ashland - "Ashland Inc. operates as a specialty chemicals company in the United States and internationally. It operates through four segments: Specialty Ingredients, Water Technologies, Performance Materials, and Consumer Markets. (Business description from Yahoo Finance)
7 reasons ASH is a solid bargain at under $62 a share:
- One of the few stocks in the Energy & Material space that has seen a substantial increase in consensus earnings estimates for FY2012 and FY2013 over the past three months.
- The company is expected significant EPS growth over the next few years. After making $3.58 a share in FY2011, analysts expect $5.84 in earnings for FY2012 and $7.21 in FY2013.
- The stock is cheap at just 15% over book value and sells at 65% of annual revenues.
- The company has easily beat earnings estimates over the past six quarters. The average beat over consensus during the last four quarters has been north of 12%.
- ASH goes for a forward PE of 8.5, a discount to its five year average (12.3). The company recently raised its dividend by 29% and now yields around 1.5%.
- 75% of the company's earnings come from high margin, less cyclical specialty material products
- The stock is significantly below analysts' price targets. The 9 analysts that cover the stock have a median price target of $80 a share on Ashland.
Disclosure: I have no positions in any stocks mentioned, but may initiate a long position in ASH over the next 72 hours.
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