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

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.

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

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.