Chemical manufacturing company FMC Corporation (FMC) sports an impressive record of sales and profit growth. Investors with a long-term investment time frame should store this stock away with the idea of picking up shares when the market takes a dip.
FMC Corp. divides its business into three segments: Agricultural products makes chemicals such as pesticides and herbicides. Specialty chemicals makes products used in pharmaceuticals, food, and lithium-derived products. The industrial chemicals division includes production and sales of soda ash and peroxygens — chemicals derived from oxygen.
Agriculture products comprise just over 40 percent of sales and the other two segments evenly split the balance.
FMC’s second quarter earnings release provided some interesting data on the company's historic growth. Using the company's forecasts for the remainder of 2011, the agriculture products segment will have completed eight straight years of increasing profits. Specialty chemicals is working on its sixth year of increasing profits and industrial chemicals is producing the highest level of year-over-year profit growth, with forecast growth of 30 percent. Profits are projected to increase at more than 10 percent overall for 2011.
Share price follows market
In spite of a record of consistent double-digit sales and profit growth, the share price of FMC Corporation appears to be firmly tied to the overall stock market. The stock has a beta of 1.02, which means the share price almost exactly tracks the market. The company also consistently increases the dividend (the yield remains under 1 percent). As noted above, FMC Corp. seems to be a stock best purchased on dips. The shares probably will not outperform the overall market, but investors can take comfort in buying a stable company while the bears run on Wall Street.
The analysts at Longbow Research have been consistent over the last couple of years in maintaining a buy recommendation on FMC and in increasing their target share price. The company reports next on Oct. 27.
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