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I was looking through the lists of top % gainers and came across a name on the AMEX gainers list that made the list a couple of days ago as well--Chase Corporation (CCF). Chase closed today at $33.49, up $1.24 or 3.84% on the day. I do not own any shares or options on this stock.
I believe this company deserves a spot on the blog for numerous reasons. Let's take a closer look at some of the supporting information for this stock and I believe I can convince you as well!
What exactly does this company do?
According to the Yahoo "Profile" on Chase (CCF), the company
"...a manufacturing company, provides various products and services to the specialty chemical, converting, and electronic manufacturing industries worldwide."
How did they do in the latest quarter?
On January 12, 2007, Chase announced 1st quarter 2007 results. For the quarter ended November 30, 2006, revenue grew 26% to $31.2 million from $24.9 million in the same period last year. Net income was up approximately 150% to $2.55 million, from $1.02 million the prior year same period. Diluted earnings per share increased 138% to $.62/share from $.26/share in the prior year.
What about longer-term financial results?
Examining the Morningstar.com "5-Yr Restated" financials on Chase, we can see the pretty picture of steady revenue growth from $69.3 million in 2002 to $108.4 million in 2006. We know this growth has continued into the first quarter of 2007 as well! Earnings have been increasing, although a bit less steadily, from $1.08/share in 2002 to $1.53/share in 2006. The company also pays a dividend which did dip from $.36/share in 2002 to $.27/share in 2003, but has been increased to $.35/share in 2006. During this same time, the number of shares outstanding has been kept steady at 4 million.
Free cash flow has been increasing from $2 million in 2004 to $9 million in 2006. The balance sheet appears solid with $2.4 million in cash and $33.3 million in other current assets. This total of current assets of $35.7 million is enough to pay the $17.2 million in current liabilities and the $15.5 million in long-term liabilities combined! When compared against the $17.2 million in current liabilities, the current ratio works out to a healthy 2.08.
What about some valuation numbers?
Reviewing the Yahoo "Key Statistics" on CCF, we find that this is indeed a small, small cap stock with a market capitalization of only $133.42 million. The trailing p/e is a reasonable (imho) 17.62. There apparently aren't any analysts predicting earnings, so there aren't any forward p/e's or PEG ratios to discuss.
According to the Fidelity.com eresearch website, Chase has a Price/Sales (TTM) of 1.10 compared to an industry average of 10.09. The company is reported to have a return on equity (ROE) (TTM) of 17.32%, comparable to the 18.54% industry average.
Finishing up with Yahoo, we can see that there are actually only 3.98 million shares outstanding and of those 2.33 million that float. As of 12/12/06, there were 5,690 shares out short representing 0.2% of the float or 1.9 trading days of volume. The short-sellers don't appear to be much of a factor in this stock at least as of the latest reported information.
As I noted above, the company has been paying a small dividend that it has recently been increasing with a forward annual dividend rate of $.40/share, yielding 1.30% going forward. No stock splits are reported on Yahoo.
What about a chart?
Checking the "Point & Figure" chart on Chase Corp. (CCF), we can see a very strong graph indeed, as the stock, which droped from $12 in January, 2002, to a low of $9.00 in January, 2003, has subsequently taken off 'like a rocket' to its current level, just under the high, at around $33.49.
Summary: What do I think?
Well, as you know, I wouldn't be writing up this stock unless I liked it! However, reviewing some of the above, the company is moving strongly higher the past few days, the last quarter was spectacular with growth in revenue and earnings. With the earnings increasing by about 150% over last year's results! And the p/e of the stock is in the teens. On top of this, the company has been reporting solid revenue growth the past five years at least, earnings have been growing nicely the last 3-4 years, and they even pay a dividend which they have been boosting.
Free cash has been increasing, the balance sheet is solid, and valuation-wise, besides the low p/e, the Price/Sales is dirt cheap and the ROE is reasonable. To top it off the chart is incredibly strong. The only thing that always bothers me is the low # of shares. But when the news is good, that often can mean a stock that moves higher quickly. But on bad news....well watch out below!
Anyhow, I have to run off to my stock club. I might just present this one for their review if I get a chance. In any case, I have presented it to all of you!
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