Chemtura Shares Popped: What You Need to Know

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Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of Chemtura (Nasdaq: CHMT  ) rose roughly 11% in early trading and remain up more than 8% as of this writing. The gains continue a multi-day, double-digit rally that kicked off with last week's announcement of a long-term supply agreement with China's Tianjin Lisheng Chemical.

So what: According to the company's press release, the deal should support growth by leveraging a new Lisheng facility for antioxidant production. Details remain unclear for now, though a just-announced investor day may offer missing context.

Now what: CEO Craig Rogerson and team will take the stage on Dec.13 at New York's Sheraton Hotel & Towers. In the meantime, the stock trades for less than one-fifth the long-term growth rate analysts expect, resulting in a 0.14 PEG ratio. The implication? Wall Street is either crazy with optimism, or shares of Chemtura are crazy cheap. Where do you stand? Would you buy shares of Chemtura at current prices? Please weigh in using the comments box below.

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Fool contributor Tim Beyers is a member of the Motley Fool Rule Breakers stock-picking team. He didn't own shares in any of the companies mentioned at the time of publication. Check out Tim's portfolio holdings and Foolish writings, or connect with him on Google+ or Twitter, where he goes by @milehighfool. You can also get his insights delivered directly to your RSS reader.

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Read/Post Comments (3) | Recommend This Article (0)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On October 12, 2011, at 6:42 PM, VegaS71 wrote:

    Wall street is crazy (analysts are too forgiving of the past). This company has been and always will be a disappointer even with the low expectations they set with their forecasts. They have no focus and no vision. This used to be a $2B market cap in June 2009 (250M shares at $8). Today after a failed sale to Apollo, excuses of the general economic meltdown and bankruptcy to clear $3B in liabilities, it is a $1B market cap. It may be making a profit but they still can't get the cashflow right becasue they do not know how to invest and waste it on frivolous spending.

  • Report this Comment On October 13, 2011, at 10:43 AM, vrillon wrote:

    Following recent announcements from this company, they seem to be making decisions to position themselves for future growth, and continue to make profit, in this most volitile market environment. Expecting the company to perform like it did pre-2008, is a bit unrealistic, since nearly all companies have fallen performance wise, with many succumbing to mergers and acquisitions just to survive in some form. As a company that makes things, I think the current share price is a good entry point for new investors, and a great BUY/value. I do not agree with (VegaS71) that the company has no vision, it is because of their vision that they were able to re-organize themselves and continue to make a profit, even in these impossibly challenging times for this sector -- and especially for a publicly traded company. In terms of numbers, the company is trending on par with its peer Albemarle, whose share price was down relative chemtura's percentage-wise for the 3-month period. Strategically, the company has made announcments of Joint-ventures and other initiatives that is worth tracking to see how they unfold for the company in the near and distant future. Another company that could be considered a peer, Arch chemicals, was recently acquired by Lonza - a move most analyst think was to allow the company to survive. I think chemtura is positioned for continued growth, and share price will recover as market conditions improve.

  • Report this Comment On February 16, 2012, at 7:16 PM, jh918 wrote:

    Tim this is off topic but do you still like "BOBS" - fast food of brazil?

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