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.
Ashand's stock has recently dipped to about $38 from $46, despite posting Q3 EPS of 96 cents, which exceeded the First Call Q3 EPS estimate of 90 cents. Attribute the recent sell-off to some who are arguing ASH's cost cuts were not sufficient, and also some year-end profit-taking, post-Q3, by short-term players: ASH's Q4 is normally its softest quarter, for seasonal reasons, hence year-end stock selling occurs a few months earlier. But view the pull-back as a Buy opportunity. The First Call FY2010/FY2011 EPS estimates for ASH are $3.24 to $3.73.
Stock Analysis: Ashland Inc. is a moderate-risk stock. If you've already purchased the company's shares, hold them. If not, consider buying a 25% position in ASH now; then buy another 25% in one month, 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 December 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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