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Strategies & Market Trends : Value Investing
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To: Michael Burry who wrote (6362)3/20/1999 5:22:00 PM
From: Stewart Whitman  Read Replies (1) of 78507
 
Mike,

You might try looking at the chemical industry. There's a great deal of restructuring going on in this area. There seem to be a lot of potential opportunities being created.

My favorite stock (which I own so I may be biased) is ARJ (Arch Chemical). This company is a recent spin-off from OLN (Olin). OLN put 3 high-growth/high-margin specialty chemical businesses into ARJ (Olin retained the big low-growth/low-margin industries). The 3 areas are: microelectronic chemicals, water chemicals, and performance chemicals. The microelectronic area is especially interesting to me given any reasonable upturn in semiconductor industry, as well as a new plant that has just come online. ARJ has said it expects earnings growth of 19% this year. ARJ trades at a trailing P/E of 12, trades at an estimated forward P/E of 10, pays a 4.5% dividend, has a profit margin of about 5%, and trades at book value. It has been profitable for at least 5 years with profit margins rising from about 2% in 1993 to as high as 6% 1996 & 1997. The balance sheet is quite reasonable (Debt/Equity is about 0.2) and OLN had a history of repurchasing shares.

There is about 5 years of history available from the company's EDGAR document - don't trust the numbers you see on Yahoo! or other services since they may be carrying over OLN numbers.

Stew
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