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Validea's pick of the week provides a detailed report on a company that scores well in the stock-screening service's model portfolios. On Validea.ca, investors can analyze 1,000 Canadian stocks through 12 different guru-based models and get individual reports on each company. Globe Investor has a distribution agreement with Validea.ca. Try it.
Innospec Inc. develops, manufactures, blends, markets and supplies fuel additives, personal care and fragrance products and other specialty chemicals. It has a $1-billion (U.S.) market cap.
The company has a return on capital (EBIT/tangible capital employed) of 36 per cent, helping it earn some interest from the Joel Greenblatt-based model. The Greenblatt-based model also likes its 10.5-per-cent earnings yield (EBIT/enterprise value).
Innospec has a 2.1 current ratio, a sign of good liquidity, according to the Benjamin Graham-based approach. It has $202-million in net current assets versus $141-million long term debt, which the Benjamin Graham-based approach also likes.
It has a stellar 9-per-cent three-year average net profit margin, which the Kenneth Fisher model likes.
The company has averaged a remarkable 97-per-cent return on retained earnings over past decade, earning high marks from the Warren Buffett model.
It has grown EPS at a 30-per-cent clip over the long term (using average of 3, 4, 5 yr EPS growth rates), part of why it gets strong interest from Peter Lynch model. The Lynch model also likes its 12.6 P/E and 0.42 P/E-to-growth ratio.
Innospec has 1.4-per-cent dividend, 18-per-cent return on equity and has reasonable debt/equity ratio of 27 per cent.
John Reese is long IOSP.
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