Opinions
David Burrows
RPM International
RPM-N
TOP PICK
Jun 12, 2014
$44.770
Stock price when the opinion was issued
Consumer Products
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TOP PICK
Stockchase Research Editor: Michael O'Reilly RPM is a $10 billion market cap producer of waterproofing coatings. It recently reported revenue growth of 19% and widening margins, which resulted in EPS rising 43% from a year ago. Management acknowledges that sales growth, particularly in the consumer sector, will slow next year as the pandemic lockdowns end; however, we expect this will open the door for industrial sales growth returning. It pays a decent dividend, backed by a 36% payout ratio of cash flow. We would buy this with a stop loss at $75, looking to achieve $109 -- upside potential exceeding 26%. Yield 1.77% (Analysts’ price target is $99.83)
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The very low cost of natural gas in the US versus the rest of the world, gives chemical companies an enormous advantage in North America. This company makes a number of specialty chemical products. About 65% goes to industry. There is a pickup in the industrial economy, and they are a big beneficiary. For example, they have a chemical that you can spray on work boots, so that when a worker walks around the construction site, they will gather no mud.