LONDON-Specialty chemicals manufacturer Croda operates quite a diverse range of business lines, spanning from ingredients for cosmetics, to chemical dispersants or food additives. Yet perhaps the most important thing about the company is its strategy of concentrating on ‘high
margin’ niche markets. Amongst other reasons, that seems to be why the Questor team, at the Sunday Telegraph, believes that the poor price performance put in by the company´s shares, following its third quarter trading update, is a bit of an overreaction. Thus, Questor believes that investors put too much weight on the 14% fall seen in sales volumes. Part of that fall was due to outsized demand in 2010 from BP for the firm´s chemical dispersants. The company´s emphasis on margins seems to explain part of the rest. In fact, margins in consumer care rose significantly last quarter. As well, Croda may soon receive good news on both its food and cosmetic lines. “Trading on a December 2011 earnings multiple of 15, falling to 14.1, the shares remain a buy,” Questor concludes.
“AZ Electronic Materials makes highly sophisticated products that are crucial to smartphones and tablet computers such as iPads. The products it makes can be 300 times thinner than a strand of hair and as the market demands electronic gadgets get lighter and smaller, the more they will need AZ’s materials. Brokers expect profits this year to reach $260m (£160m) and be accompanied by a maiden dividend. The group will not be unaffected by the current economic slowdown but is better placed than most to withstand the headwinds. The shares represent good value. Buy,” writes the Mail on Sunday.
The ‘sell-off’ among the minnows of the FTSE AIM 100 has been indiscriminate, and amongst the bargains let behind is copper and gold explorer Bezant Resources declares The Financial Mail on Sunday´s This is Money website. The firm is in the process of tying up a £44m ($70m) deal to sell its Mankayan copper and gold project in The Philippines to South Africa´s Gold Fields. The proceeds that will be funneled back to investors are equivalent to 35p a share, 5.5p more than the company´s share price, and will see the company left with what This is Money describes as a ‘promising copper project in Argentina’ that will be ‘fast tracked’ with part of the proceeds. Investors may have been put off by the fact that payment is not due from Gold Fields for another year, and always only in case it decides to excercise its ‘call’ option, the website adds. However, Bezant´s technical director holds that the reason that Gold Field will wait a year to make the purchase is the fact that it has already committed significant resources to another purchase. As well, Gold Field is expected to pay £4.4m upfront in the form of a non-refundable deposit. In the opinion of Ian Lyall, at This is Money, Bezant is, “a stock to buy, hold and forget about until the market finally does catch on.”
***BEZANT RESOURCES***Looks like the market has just caught on here. Of course we caught on about a week ago!
- Bezant Resources. Investor Options! (brokermandaniel.com)