Specialty chemical company Innospec (IOSP)
has been quite the stock over recent years. Up almost 40% over the last
year, over 60% over the past two years, and over 600% over the last
five years, Innospec has done a good job of leveraging its solid share
in fuel additives and surfactants used in personal care products. Along
the way, Innospec has also uncovered a pretty interesting growth
opportunity in drilling/oilfield chemicals that could ultimately
increase its addressable revenue opportunities by several times.
The
only "but" in the story is the valuation. As strong as the markets have
been, this is a familiar lament (particularly from value-oriented
investors like me) and certainly not exclusive to Innospec. On one hand,
I do recognize that this company is well-positioned to out-grow the
average specialty chemicals company and continue to generate good
margins and returns on capital. On the other hand, you do have to
stretch the growth estimates and/or multiples to generate an attractive
price target today.
Please continue reading here:
Innospec Looking To The Next Run
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