Investing in Chemical Companies with a Niche Appeal: Expert Analyst Daniel Rizzo Discusses His Coverage of Specialty Chemicals and Which End Markets are Driving Growth

Wall Street Transcript

67 WALL STREET, New York - July 19, 2013 - The Wall Street Transcript has just published its Agricultural & Specialty Chemicals Report offering a timely review of the sector to serious investors and industry executives. This special feature contains expert industry commentary through in-depth interviews with public company CEOs and Equity Analysts. The full issue is available by calling (212) 952-7433 or via The Wall Street Transcript Online.

Topics covered: Crop Yield Management - U.S. Corn Crop - Chemicals Companies Pricing Power - Fertilizers, Paints and Coatings, and Petrochemicals - Emerging Market Demand - Specialty Chemicals and Fertilizer Pricing Power

Companies include: American Vanguard Corp. (AVD), Quaker Chemical Corporation (KWR), Minerals Technologies Inc. (MTX), OMNOVA Solutions Inc. (OMN) and many more.

In the following excerpt from the Agricultural & Specialty Chemicals Report, an expert analyst discusses the outlook for the sector for investors:

TWST: Which two, three chemicals stocks would you recommend as best bets for investors today, and what do you like about each of those?

Mr. Rizzo: Sure. My favorite stock right now is a company called American Vanguard. The stock is cheap now; it obviously took a hit last week. I think the stock was down roughly 30%, 30-odd percent. Because they preannounced a bad quarter, in my opinion, that was a lot of what - the problems they have there are weather-related and are just a timing issue. They will probably recoup most of that in the third quarter, and I think the stock is currently undervalued. I think it will benefit from just an uptick in demand for corn.

Corn prices are low because of an increased acreage right now, but that increased acreage is going to pull them in for their herbicides and pesticides. For American Vanguard in particular, they don't have a lot of competition for one of their main products that corn is grown, insecticide, and demand is high because of rootworm problem and just because of traditional corn, and corn planting has led to some other methods of killing pests to be less effective. So I think they are in a unique position.

Another company I like a lot is Omnova Solutions (OMN). This is more of a valuation; it's probably the cheapest name in my sector, trading at less than 10 times estimate - didn't really enjoy the run-up that a lot of other chemical companies did. They have heavy exposure, or just a decent exposure, to housing, to their laminate and their cabinet end markets.

They make a chemical that uses corporate backing and they make laminates for cabinets, and I think that's going to help fuel revenues, and as I said, one of the things that's killed them in the past is raw material costs, particularly butadiene. Those costs have been benign for about six months now; don't see that really going up, so I think they could really do well when...

For more of this interview and many others visit the Wall Street Transcript - a unique service for investors and industry researchers - providing fresh commentary and insight through verbatim interviews with CEOs, portfolio managers and research analysts. This special issue is available by calling (212) 952-7433 or via The Wall Street Transcript Online.

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