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Ingevity (NGVT) Hits New 52-Week High: What’s Driving It?

Zacks

Shares of Ingevity Corporation NGVT scaled a new 52-week high of $102.04 on Sep 7, before closing at $99.32.

The company has a market cap of roughly $4.2 billion. Average volume of shares traded in the last three months was around 227.9K. The company has expected long-term earnings per share (EPS) growth rate of 12%.

The stock has rallied 25.3% in the past six months compared with the industry’s 2.8% rise.



Driving Factors

Buoyant outlook and upbeat prospects from the Georgia-Pacific’s pine chemicals business buyout are contributing to the rally in Ingevity’s shares.

In second-quarter earnings call, the company stated that it is optimistic about 2018, courtesy of benefits from improving market conditions for basic materials and high-value added technologies. Ingevity raised the mid-point and narrowed the range of 2018 guidance for adjusted EBITDA to $302-$314 million from $293-$307 million. The company projects sales between $1.10 billion and $1.13 billion for 2018.

The company is expected to gain from its strategy of pursuing value-creating acquisitions. Earlier this year, Ingevity closed the acquisition of Georgia-Pacific’s pine chemicals business for $310 million. The buyout boosted sales growth in the Performance Chemicals segment in the recently reported quarter. The acquisition is expected to create net synergies of roughly $11 million through manufacturing optimization, lower logistics costs and leveraged procurement costs.

Moreover, higher adoption of tall oil fatty acid (TOFA)-based products is driving results in the Performance Chemicals division. Healthy TOFA pricing had positive impact on the margins of the division during first-half 2018. Also, the company expects high margin application areas to continue gaining strength.


Zacks Rank & Other Stocks to Consider

Ingevity currently sports a Zacks Rank #1 (Strong Buy).

A few other top-ranked stocks in the basic materials space are Nutrien Ltd. NTR, Celanese Corporation CE and Huntsman Corporation HUN, each sporting a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.

Nutrien has an expected long-term earnings growth rate of 14%. Its shares have moved up 19.8% in the past year.

Celanese has an expected long-term earnings growth rate of 10%. Its shares have gained 17.1% in the past year.

Huntsman has an expected long-term earnings growth rate of 8.5%. Its shares have returned 5.8% in a year.

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