Sigma-Aldrich: Providing research-grade chemicals to the life sciences

The firm pleased investors last month, when it reported Q4 EPS of 51 cents (ex-items) and revenues of $464.5 million. Analysts had been expecting 47 cents and $447.7 million. Management also guided FY07 EPS to $2.15-$2.25, versus $2.15 consensus. The CEO cited expected organic sales growth, contributions from the recently acquired Epichem Group and favorable currency exchange rates in support of the positive outlook. The news popped the shares out of a February "cup" into the March "handle" of a Cup & Handle formation. The price is now showing signs of completing the pattern with a bullish rise from the right-hand side of the "handle".

Brokers recommend the issue with two "strong buys", one "buy" and six "holds". The stock's ratios compare favorably with industry, sector and S&P 500 averages: P/E ratio - 19.96, Price to Book ratio - 3.83, Price to Free Cash Flow ratio - 27.03, Sales Growth rate - 13.15%, Operating Margin - 21.07%, Net Profit Margin - 15.40%, Return on Assets - 12.40%, Return on Investment - 15.54% and Return on Equity - 20.94%.

Institutional investors hold about 85% of the outstanding shares. The stock is one of those used to calculate the S&P 500 Index. Over the past 52 weeks, it has traded between $31.79 and $42.91. A stop-loss of $35.60 looks good here.

Larry Schutts is a contributing editor for Theflyonthewall.com and the Vice-President of Stockwinners.com.