LNXSY - Lanxess AG: Cheap European Chemical Stock Still Below The Radar Of Many Value Investors
Summary
- Lanxess falls squarely into the category of significantly dislocated equities, with strong cash flows well suited to weather the current uncertain economic environment.
- Lanxess sold its lowest quality divisions at ~8x EV/ EBITDA (synthetic rubber) and ~12x EV/EBITDA (high-performance materials). Yet, the Company trades for ~3x EBITDA today. The stock should triple from here.
- Lanxess acquired consumer care chemicals company, Emerald Kalama, for 9.0x EBITDA and IFF's Microbial Control business for 9.6x EBITDA.
- Fear of European recession, the Ukraine situation, and the summer spike in European Natural Gas prices have caused investors to sell quality companies such as Lanxess to unsustainably low levels.
- While investors fled names like Lanxess when European Natural Gas surged, it seems to have barely registered in the stock price as gas pricing has plunged 75% from the August highs through today.
For further details see:
Lanxess AG: Cheap European Chemical Stock Still Below The Radar Of Many Value Investors