Innospec Continues To Hit Its Marks, And Performance Chemicals Is Showing Exciting New Potential

I'm accustomed to quiet excellence from Innospec (NASDAQ:IOSP), a small ($2.7B market cap) specialty chemical company with operations in fuel additives, personal/home care, and oilfield services. Typically not well-covered by the Street, Innospec has generated mid-teens long-term returns for investors and has continued to build the business through a combination of organic reinvestment and selective acquisition. It's been a while since I've written about the company, but it has continued to execute well. Up about 10% since my last update, Innospec has beaten the market over that time, as well as many of its specialty chemical peers.

With management reinvesting more aggressively in growth opportunities within specialty chemicals for personal care and looking to drive improved operating leverage in the oilfield services business, I'm still bullish on the company and I find the valuation more interesting here. If mid-single-digit revenue growth and mid-to-high single-digit FCF growth are credible, these shares could still offer double-digit annualized return potential from here.

 

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Innospec Continues To Hit Its Marks, And Performance Chemicals Is Showing Exciting New Potential