Ashland Inc. (NYSE: ASH) is a global, diversified chemical company that's involved in the plastic, resin/polymer, water treatment, and oil-change fields.
Analysts expect high-single-digit revenue growth for Ashland's water technology and Valvoline segments, but softer growth in performance materials and chemicals.
Further, a restructuring initiative is yielding cost reductions; margins remain adequate. Moreover, there is a sense that ASH's shares do not reflect the improving outlook in many of ASH's businesses, and ASH's p/e of 14 speaks to that undervaluation. The Reuters FY 2008/FY 2009 EPS consensus estimates for ASH are $3.19/$3.83.
The risks? A slowdown in global economic growth would hurt ASH's results. Analysts also have an eye on ASH's raw material costs.
The First Call mean rating for ASH is: Hold [8 firms]. Mean 2008 target: $57.00 [high: $70, low: $48].
Stock Analysis: Ashland is a moderate-risk stock not suitable for low-risk investors. Investors with an investment horizon longer than 2 years should be rewarded from ASH's shares. Sell/Stop Loss if you were to purchase shares in this company: $28.
Disclosure: Lazzaro has no positions in stocks. In addition to private real estate holdings, he owns corporate and municipal bonds, and cash certificates of deposit.
Why do we have a weak dollar?
Holiday hiring slow for retailers
Closing Bell: What sell-off? (AIG, ABK, EPR, MBI, JAVA, ORCL, ERTS)
