In this edition of The Motley Fool's "Ask a Fool" series, Motley Fool analysts Jason Moser and Brendan Mathews take a question from a reader who asks, "Regarding CaesarStone (NASDAQ:CSTE), does The Motley Fool have any insights into the lawsuit and/or why the kibbutz is selling a third of their stock?"
The company is the subject of a class action suit related to independent fabricators contracting silicosis. Brendan admits this is certainly a risk for the stock, but he isn't willing to make any short-term predictions on who will win the suit. Companies are frequently sued, and in this case, CaesarStone plans to defend itself vigorously.
Regarding the reader's second question about Sdot-Yam, an Israeli kibbutz and major holder of the stock, Brendan believes they are essentially selling to cash out a portion of their stake. He doesn't believe the sale by Sdot-Yam is related to the lawsuit. And, overall, despite the lawsuit and Sdot-Yam's share sale, he believes the company does have significant potential for growth, assuming it's successful in its attempts to break into the U.S. countertop market.
Editor's note: In a previous version of this article and in the video above, we stated that the lawsuit involved Caesarstone employees rather than independent fabricators. The Fool regrets the error.
Brendan Mathews has no position in any stocks mentioned. Jason Moser has no position in any stocks mentioned. The Motley Fool recommends Caesarstone. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.