HWKN - Hawkins: Management Redeploying Capital At An Advantage Initiate Buy

2024-07-14 21:57:07 ET

Summary

• Hawkins is a leading specialty chemical company with operations in industrial, water treatment, and health and nutrition sectors.
• The company's prioritization of acquiring water utility assets has led to higher ROICs and a new runway for capital deployment.
• Valuations support a buy rating for HWKN, with potential for significant earnings growth by FY'26E.

Investment Thesis

In Q3 FY'23, I advocated heavily to allocating to the basic materials sector as it presented with the highest growth prospects albeit at the smallest weighting of the S&P 500 Index sectors [avid readers of this channel will remember this]. This was still true at the end of Q1 FY'24 (Figure 1). I continue to see value in this domain on a price/value basis, which brought me to determine the investment prospects of Hawkins, Inc.'s ( HWKN )....

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