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Ashland Inc. Message Board

  • bcmountaineer32 bcmountaineer32 Feb 4, 2009 2:35 PM Flag

    Valvoline brand name alone is worth $7 per share!!!

    Yes, I know the economy is sucking wind and that glory days will take some time to come back....

    However, how can ASH not be a screaming BUY at $7 per share???? You are getting over 4% dividend and ASH has some NON-CORE businesses that they could sell off in a worse case scenario that would allow them to meet any loan payments (though, I imagine that it would not need to come to that).

    Valvoline alone is worth $7 per share. Valvoline Brand name is hugely known and I stongly believe that the Valvoline SBU will show increased profits during the next quarter's report (due to low crude lube stock prices we have been seeing since last FAll....if the price of oil has fallen to 1/3 of the cost it was last Fall and the price of the VOIC oil change has stayed the same...looks like a very nice profit picture going forward).

    So, why isn't ASH a strong buy here? Cramer said BUY at $, what am I missing?

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    • I mean it was really simple to see ASH was oversold a couple months back.

      I have predicting Valvoline would show some nice profits for several the "experts" are saying what was pretty obvious:

    • I may be nuts, but I just bought another 3,500 shares. If they don't make a further dividend cut, this will yield nearly 5%.

      Of course the stock is being hammered over solvency concerns. I am betting they will recover or get bought before all value is lost. Key word is "betting".

    • Cap'n: good post; you are obviously familiar with the last 15 years of ASH history. Agree with you about JJO. Saw some hope when he began: he seemed candid, engaged, even real in his small breakfast groups. Went off the rails at some point, and both Gary C. and Marvin Q. (who would have been great influences during markets like these) probably left due to philosophical disagreements with Jim. As long as 5 years ago, he spoke of "strategic architecture" or buying and selling units opportunistically, which fits a holding company. Anyway, I believe you are right that they need to experience a "loss of indenpendence", as the recent 8-K gross profit trends do not bode well for AHWT, the big bet that he made with HPC acquisition. Thanks for speaking up - very accurate input.

    • ok i did some quick research BofA off about same as ASH . Citicorp down BOUT 95 %

    • Ya think that most of the bad news is factored in eh? when a stock is devalued by 90 percent how much more bad news is there? Is Bank of AMerica or Citi off as much as ASH? I haven't checked but they are possibly going to be nationalized ie zero value for share holder. AsSH isn't in that shape is it? Wall street seems to think so.

    • Pardon my presumption to speak but feel compelled... I happen to agree with your several posts... and perhaps have some insight worth sharing.

      For oh these many years Ashland has been de facto a holding company with a bloated "Core Group" managing disparate assets. Recent history, they have disposed of many BU... something the analysts have been demanding for many years. Unfortunately, they also seem to have disposed of most earnings. Ashland has an unending string of crappy dispositions (Blazer Energy/Mapco/coal) followed by even crappier acquisitions... Ashland Exploration (1st sale) funding Riley Stoker et al comes to mind...

      But I digress: once upon a time in ASH land, the buzz was "synergy" and Valvoline allegedly added synergistically to Ashland Petroleum... uh, excuse, Ashland Inc. Truth told, Valvoline burned up any possible profits in advertising the Indy 500 or College Football Scoreboard or etc. This BU never made any money. Dirty secret, all the various lubricating oil brands are exactly the same. Fossil Oil is fossil oil. Without Ashland Petroleum, even Smilin' Jim no longer speaks of synergy. About the only positive, I don't see Valvoline advertising/sponsoring as heavily as back in the day.

      I do not own any ASH stock but do have an interest in seeing them succeed. I don't see success so long as Smilin' Jim is at the helm. Passing the baton to another Executive Assistant protege will definitely not succeed. I think the company's best future lies in some form of merger/loss of independence. I'd hate to see bankruptcy as the outcome.

      BTW, I"m stunned that the Core Group would part with the aviation battalion... stunned. How can the Core Group get to Lexington and Columbus? Not too mention Aspen and Augusta.

    • I agree that you should only keep a stock in your portfolio based on future value analysis but I disagree with you that ASH is more risky than many stocks out there. It was $70 and now $6+....I think most bad news has been factored in!!!
      ASH can most certainly go down but I believe there is much more upside potential to ASH shares at this $7 buy-in point....I can't see ASH going much lower unless everything goes to crap....and then, almost every equity is in trouble. Best wishes.

    • One should never focus on what they paid for an investment. It is absolutely irrelevant what the original cost was to the investor. The only relevant value is what it is worth today. That is the amount that you currently have invested not what you paid for it. Therefore, on any given day that you keep holding that investment, you are saying to yourself and the world that you think that this is the most under-priced and under-valued investment that you could make of all the stocks on wall street. Personally, I can think of dozens of stocks that are a better value than Ashland at $6.50 per share. If you own a hundred shares of ASH, you currently have around $650 invested. Take the money and invest it in something that is actually worth $650 and, hopefully, a great deal more. This is an extremely risky stock.

    • I'm not sure if anyone commented as to how stupid the statement that Valvoline alone is worth $7 a share. First of all, it is likely worth more than that. Secondly, that doesn't mean anything. The salient point is that Ashland has nearly $34 per share worth of debt and a market value of $7 per share. The combination is known as the Enterprise Value. This is what you are buying when you buy Ashland stock.

      The real question is, do you think Ashland is worth more than $41/share in today's environment? Book value is nearly $49/share. No goodwill impairment was taken last quarter. Is it possible BV is overstated?

      Your point about margin expansion is a good one. PM and Valvoline thrive in this environment. This situation can hurt distrubution's earnings, but the decline inventory value will throw of a bunch of much needed cash. I, like Ashland, have never been able to figure out Water.

      I will accumulate under $7. IMHO, ASH will get bought before it goes under.

      • 2 Replies to go_bucks_90
      • I think you grossly miscalculated the book value. As of 12/31/08, the tangible book value of Ashland was $2.12 per share. I can also assure you that it is something less than that now. Q2 will make Q1 look like a fabulous quarter. Stock prices of companies with bright futures do not drop continuously week after week as this dog has been doing.
        You can thank O'Brien who has demonstrated his expertise and acumen as a CEO during 2008 as well as demanding and paying himself nearly $5,000,000.00 during 2008 for his effort. I'm sure we are all grateful, especially those who are trying to feed their children on unemployment checks.

      • Stupid is rooting for Ohio "lose big bowl games" State :o)

        Yes, I know fully about how to value a stock (I feel fairly certain my DD is better than most) headline was brief to get attention. At least we agree on ASH as a BUY at these levels.

    • Good to see the "experts" are now seeing the profit margin growth that I have been preaching for at least 3 months:

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