Innophos (NASDAQ:IPHS)

basilisk333 (70.65) Submitted: 11/3/2008 3:14:53 PM : Start Price: $22.91 IPHS Score: +114.71

Innophos appears to have a near-monopoly on a product which is widely used in various consumer goods throughout the world. The company absolutely destroyed earnings expectations last quarter, sending shares skyrocketing. The recent market decline has brought a corresponding drop in the price of IPHS shares, making it once again an excellent buy.

The only real purported knock I've heard regarding Innophos is increased raw materials costs. While Innophos reported earlier this year that raw materials prices had been rising, according to Innophos and the analysts covering the company, raw materials prices have dropped sharply in recent weeks and are expected to drop further. In addition, during the time in which raw materials were steadily rising, Innophos successfully passed that increased cost straight to its customers in order to avoid a decline in profits. While it is often true that increased prices may lessen demand, this is more often only true where there is direct competition from another company who can make and sell the product more cheaply or where the product itself is fungible and some other product can be substituted in its place. Neither of these appears to apply to Innophos at this time. As a result, it seems to me that Innophos' profitability is sustainable for the near future, and the stock is a good buy once again after the recent broad-based market woes.