NewMarket Corp. (NYSE:NEU) is an unusual company in many respects. A strong player in additives for lubricants and petroleum-based fuels, it has an enviable track record for EBITDA margins, cash flows, and returns on capital when compared to other specialty chemical companies. The company has been fairly generous about return capital to shareholders, but a lack of stock splits has led to a high absolute share price and somewhat thin trading volume, as well as minimal sell-side coverage. What's more, while NewMarket is good at what it is and generates healthy cash flow, it has taken a different path from many of its specialty chemical peers that have been looking to deploy their cash flow into diversifying acquisitions.
I like how NewMarket operates, and I think the expansion of the company's presence in Asia will improve the company's top line growth prospects. That said, I still don't believe the overall top line growth outlook is all that good, and the share price already seems to anticipate quite a bit of cash flow growth.
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NewMarket Needs To Find New Markets To Drive Growth