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OM Group, Inc. (OMG), Methanex Corporation (USA) (MEOH): Specialty Chemical Companies for You to Consider

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This is a continuation of my write up of specialty chemical companies that seem to be good investments, including a couple of businesses that produce additives to petroleum or gasoline products (see also: “Specialty Chemical Companies for You to Buy“). These are all in the mid-capitalization range, between $1 billion and $10 billion. A bit of research should help decide where the best investments are.

OM Group, Inc. (NYSE:OMG)

Divestiture of division should assist profit trends

The first company on my list is OM Group, Inc. (NYSE:OMG). It is a diversified manufacturer operating through three divisions:

1. Magnetic technologies contributed 39% of 2012 revenue

2. Specialty chemicals 25%

3. Battery technologies 9%

The remaining 27% of sales were derived from the advanced materials segment, that was subsequently divested on March 29.

That division sale, along with the sale of its ultra-pure chemicals business within specialty chemicals, ought to support much-improved margins and better year-over-year profit comparisons.

Remaining businesses will focus on organic growth and synergistic acquisition activities. In fact, OM Group, Inc. (NYSE:OMG) has a strong balance sheet that should provide funding for such purposes, marked by a low long-term debt-to-equity ratio of 8%.

OM Group, Inc. (NYSE:OMG)’s shares are up an impressive 39% this year as of this write-up. Shares are trading at a P/E of 18.4 on a forward basis. More upside may be in the cards as the benefits of its profit enhancing measures are realized.

Methanol producer on a roll

Methanex Corporation (USA) (NASDAQ:MEOH) is a producer of methanol, a clear liquid that has been generating strong demand thanks to its increasing inclusion in gasoline as well as for household cooking and heating applications and for biodiesel use.

Total sales volumes of methanol rose about 10% in the June quarter, and should continue to trend upward. Along with higher demand and pricing in North America and Europe, China is gaining ground as an international market. As a result, share earnings are apt to approximately double this year if conditions hold.

Methanex Corporation (USA) (NASDAQ:MEOH) shares are trading at a forward P/E ratio of 11.0, but the stock is primarily a growth investment at this juncture. The company is investing in facilities where, geographically, it sees opportunities for several years hence.

Petroleum additives maker performing well

Finally, NewMarket Corporation (NYSE:NEU), similar to the previous company, produces petroleum additives. Its four subsidiaries are involved with that operation in some form or another, including a real estate development business that owns its own facility.

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