Sometimes the best investments can be in companies you've never even heard of.
Take a recent find from Paul Price on Real Money, for example.
Ingevity (NGVT) plays a role in many parts of your life. The company produces industrial chemicals and carbon-based solid materials that go into everything from asphalt to ink to agricultural products. Ingevity doesn’t make the products you buy or use. They make the materials that go into the products you buy and use.
Which puts them right in Paul Price’s sweet spot. Ingevity spun off from its parent company, WestRock (WRK) in 2016.
“Post-spin-off results have been excellent," according to Price. "All major business metrics improved greatly over the past five years. Per share cash flow climbed by 221%, earnings per share surged by greater than 230% and book value rose by more than 450%. Management also retired almost 7% of the outstanding shares since the end of 2016.”
However the stock's current price does not reflect that strength.
"Bad news for continuous holders can be great news for investors buying now," Price wrote. "Throw out the momentary covid-related panic from March 2020 and NGVT has almost never been available this cheap."
Price notes that “after carving out an all-time high share price north of $120 during February 2019, the stock declined even as fundamentals continued to rise. Total return since Dec. 31, 2016, through Feb. 18, 2022, was only 21.2% while the company's true value surged."
The way Price sees it, "Value Line looks for EPS to reach $5.90 this year, building on 2021's record results. Apply a slightly below normal, 19 multiple, and a year-end target price of $112.10 appears possible."
Past performance is no guarantee of future outcomes of course, and if you're considering a trade you should consult with your investment professional.
Price notes that "high beta shares like this can move up very quickly when the mood turns positive."
