Cabot Corp (NYSE:CBT)
A global specialty chemicals and performance materials company. Its principal products are rubber blacks, performance products, inkjet colorants, fumed metal oxides, aerogels, tantalum and related products, and cesium formate drilling fluids.
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I think its best this way. I hope I 'll receive money by this.
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It has a good valuation as well as growth.
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CBT is heavily involved in high growth rate emerging markets; i.e., These markets will be taking up the current slack in Europe and the US. Its other new businesses are becoming ever more important to the high tec. energy drilling / wells. No mistake can be made in this field any longer. Cesium Formate will slowly become the chosen drilling fluid.
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Market for Cabot's product is picking up strongly.
Restructuring measures in place should significantly reduce costs.
Strong position in China.
Strong debt/equaty rating.
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Healthy working capital and good cash/market cap.
Should return to profitability.
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Biggest problem for CBT has been its contracts with the tire companies. Whilst the prices of oil was increasing, CBT was always dephased with its pricing; on top of that it needed ever larger quantities of working capital. It is in my understanding that the clients will have bought at he most appropriate moment before contracts forced a price increase. Now that oil price are going down, it should be easier to recuperate some of the price dephasing problem, allowing for increased margins on the sale of carbon black to the clients. Although the recession will reduce the sale of cars, it will not reduce the sale of tires in the same proportion.
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Oil and Gas are in right now
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- 19% insider ownership
- .76 price to sales ratio
- 1.7 price to book
- PE: 23.84 FPE 13.29
Cabot Corp is a profitable company in a unique industry. The chemicals and specialty metals made by CBT are used in everything from cake mix to hydrogen fuel cells to tires to insulation.
The reason I'm bullish on CBT is largely because of its potential to be a player in the green energy revolution. Its aerogel products could potentially replace traditional materials used for housing insulation. And its involvement in fuel cells should be a catalyst, especially if governments throw support behind it.
CBT has a great deal of international exposure, with about half of its employees working outside the United States. Add it all up and CBT is a buy.
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Cost controls in the company are appropriate and thoroughly part of the culture of the mature businesses. Several new businesses are poised to do very well.
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A carbon black company (tire manufacturing). This is an experimental pick based on a screen. I screened this site for large cap American companies with very few picks. The idea was to find some contrarian choices. After sorting through merged entities I came up with this and did due diligence. Its an OK company. Obviously not the kind of thing that has (or ever will have) a big following. Not a lot of competition in the Carbon Black business, though.
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