This week we’re looking at Commodity and Specialty Chemicals, here at TWST. We spoke with Dmitry Silversteyn, analyst at Longbow Research, who told us his pick in this space: Ecolab (ECL).
Ecolab is a company that develops a variety of chemical products, most notably for cleaning and sanitizing but also for pest elimination. Ecolab also provides a number of services including maintenance and repair to hotels, restaurants and healthcare and educational facilities.
Ecolab, according to Mr. Silversteyn, is a company that “through good times and bad delivers on expectations.”:
Mr. Silversteyn: You are looking at a companythat’s growing close to double digits, that has a 50% plus gross margin, that has a 20% plus return on equity and 15% average growth in earnings in a very predictable, stable way and investors have been willing to pay a higher multiple for that predictability. I think that will continue. And again, given the lack of economic sensitivity of this company, we think it has an appeal to both growth investors as well as those looking for a safe haven.
For the full interview with Mr. Silversteyn, including an overview of the space in the second quarter of 2008, and some areas to avoid in this space, click here.
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