Shares of Sigma-Aldrich (SIAL) reached a new 52-week high of $104.22 on Aug 19, exceeding its previous high of $104. The stock retraced a bit to end the trading session at $104.14 on that day.
The lab chemical and life sciences company, which has a market cap of around $12.4 billion, has seen its shares rise roughly 11% so far this year. Average volume of shares traded over the last three months is around 506K. The company’s long-term projected EPS growth is around 8.1%.
What's Driving SIAL Up?
Sigma-Aldrich’s second-quarter 2014 results, reported on Jul 24, were a mixed bag with earnings narrowly beating the Zacks Consensus Estimate while sales missing the same. Profit rose year over year on healthy momentum in the company’s Applied division. Sigma-Aldrich modestly raised its earnings guidance for 2014. The company has delivered positive earnings surprises in trailing four quarters with an average beat of 2.45%.
Sigma-Aldrich, a Zacks Rank #3 (Hold) stock, remains focused on taking advantage of country-specific opportunities by expanding its presence in high-growth emerging markets. It is actively expanding its foothold in the Asia-Pacific region. Moreover, the company’s significant investments in sales, marketing and R&D initiatives are generating demand for its products.
Sigma-Aldrich has also taken up cost control and plant process improvement actions and is effectively managing its working capital, contributing to healthy free cash flow generation. The BioReliance acquisition, which extended the company's reach into the promising new market of biologic drugs, should add to its growth this year.
Moreover, Sigma-Aldrich remains committed to offering incremental returns to its shareholders through dividends and share repurchases.
That said, Sigma-Aldrich’s research business, especially with large pharmaceutical companies, is expected to continue to face challenges due to a still uncertain academic spending environment. Uncertainty surrounding academic funding is expected to sustain in the near term.
Other Stocks to Consider
Other companies in the specialty chemicals space with favorable Zacks Rank include Green Plains Inc. (GPRE), Ferro Corp. (FOE), BioAmber Inc. (BIOA). While Green Plains holds a Zacks Rank #1 (Strong Buy), Ferro and BioAmber retain a Zacks Rank #2 (Buy).