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CaesarStone Lawsuit: What Investors Should Know About the Future of the Stock

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. 

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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.

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Brendan Mathews

A Fool since 2005, Brendan is a research analyst on The Motley Fool's Stock Advisor newsletter. He enjoys scouring financial statements, pontificating on competitive advantage, and any outdoor activity.

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8/27/2015 4:00 PM
CSTE $40.62 Up +1.57 +4.02%
Caesarstone CAPS Rating: ****