PolyOne Corporation (NYSE: POL) provides
vinyl compounds, polymer coating systems, screen printing inks, engineered films, specialty resins, colors, additives and high performance compounds to 10,000 customers in 35 countries. The company also distributes a full range of resins from such manufacturers as Dow Chemical (NYSE: DOW) and DuPont (NYSE: DD). PolyOne operates from manufacturing facilities and joint ventures in North America, South America, Europe, Asia and Australia.
The firm surprised investors last week, when it announced Q4 EPS of 9 cents and revenues of $631.3 million. Analysts had been expecting 7 cents and $623.9 million. In discussing the solid quarter, the CEO particularly noted growth in the PolyOne construction-independent non-vinyl businesses. Management also guided FY08 revenues to about $2.91-$2.96 billion, versus Street consensus of $2.68 billion.
The stock
price popped through 90-day moving average resistance on the news and then began forming a bullish "pennant" consolidation pattern. Stocks frequently exit pennants moving in the same direction they were traveling on entry. In this case, that would be to the upside.
Brokers recommend POL with two "buys" and three "holds". Analysts see a 44% growth rate, through the next year. The stock's Price to Sales ratio (0.25), Price to Book ratio (1.00), Price to Cash Flow ratio (9.43), Price to Free Cash Flow ratio (27.26) and EPS Growth rate (200.00%) compare favorably with industry, sector and S&P 500 averages. Institutional investors hold about 95% of the outstanding shares. The stock is one of those used to calculate the S&P 600 SmallCap Index. Over the past 52 weeks, it has traded between $5.11 and $9.29. A stop-loss of $6.00 looks good here.
Larry Schutts is a contributing editor for Theflyonthewall.com and the Vice-President of Stockwinners.com. He does not hold positions in any of the stocks mentioned above.
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