ECL - Ecolab: Economics Fully Captured Valuation Calculus Biased To Downside

2024-07-16 10:17:12 ET

Summary

• The Basic materials sector still presents many selective opportunities at respectable discounts.
• Ecolab is up 22% YTD on strong fundamentals, but looks fully priced at current multiples.
• Current valuations suggest limited upside, supporting a hold on weak ROIC persistence and high multiples.

Investment Thesis

The basic materials sector continues to present selective opportunities, priced at significant discounts from what we appraise their private market value to be. After presenting this top-down view in Q3 FY'23 (avid readers of this channel will remember this well) the sector is up roughly 5% this YTD with many names outperforming....

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