France's Arkema (OTCPK:ARKAY) (AKE.PA) is far from unusual in trying to shift away from commodity chemical businesses in favor of specialty businesses with higher margins and less competition, but the company has nevertheless done a good job of making that shift. I believe that at least 70% of the company's earnings can now legitimately be said to come from specialty businesses, and it has the opportunity to buy its way toward an even richer mix.
addition to the better growth and margin potential of specialty
businesses like adhesives and sealants, Arkema's commodity acrylics
business could be looking at a cyclical improvement in the coming years.
Looking at the cash flow potential of the business, the shares look as
though they could be 5% to 10% undervalued, which I believe is enough in
this market to merit a closer look. I would note that Arkema's U.S.
ADRs aren't as liquid as an investor might like though, and so I'd
suggest at least considering the Euronext-listed shares.
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A Growing Specialty Mix And Improving Acrylics Bode Well For Arkema