As expected, Ashland is starting to deliver

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Right now, it's all about Ashland: I'm Reiterating my Buy rating for Ashland (NYSE: ASH), first recommended on May 4, 2009 at a price of $26.03. If you purchased then, you're up about 40%. Not bad, for an economy that's just starting to pull out of a recession.

Ashland makes specialty resins, polymers, and adhesives for sale in North America and Europe. It also owns the Valvoline oil-change brand and oil service chain, and the Zerex anti-freeze brand, among other business operations.


As noted, the above business strengths, combined with logistics efficiencies, and superior marketing in consumer markets, make ASH a bargain. To be sure, given the recent stock price run-up and a P/E of 14, ASH is not as cheap as it was in May, but the shares are still favored here, particularly given the very good prospects for substantial share appreciation (+50%).

However, do note the revised Sell/Stop Loss: $23 up from $8. The First Call FY2009/FY2010 EPS estimates for ASH are $3.04 to $3.16.

Stock Analysis: Ashland is a moderate-risk stock. If you've already purchased the company's shares, hold them. If not, consider buying a 50% position in ASH now; then buy another 25% in three months, if U.S. and global economic conditions don't worsen substantially. Under any circumstance, don't buy more than 75% of your ASH position before October 2009. Sell/Stop Loss if you were to buy shares in this company: $23.

Disclosure: Lazzaro has no positions in stocks, but does own shares in two Pimco Bond Funds: PHDAX and PYMAX.

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Last updated: February 10, 2010: 12:40 AM

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