Track the companies that matter to you. It's FREE! Click one of these fan favorites to get started: Apple; Google; Ford.



Altair's Thin Coating

A few weeks ago, I wrote about how Behr's Premium Plus Ultra paint now uses Nanophase Technologies' (Nasdaq: NANX  ) proprietary nanoparticles. That news makes the $134 million nanotech company look like a solid, if not spectacular, investment.

You might think I'd be similarly bullish about word from Altair Nanotechnologies (Nasdaq: ALTI  ) that it's teamed up with leading paint manufacturer Sherwin-Williams (NYSE: SHW  ) to form a new company, AlSher Titania. All things being equal, it would be a step in the right direction for Altair; but as I've often said before, when it comes to this company, all things are not equal.

First off, Altair claims that AlSher Titania will be able to produce titanium dioxide pigment at a significantly lower price point than rivals. I find this a little hard to believe, especially since BASF (NYSE: BF  ) and Millennium Chemical (a subsidiary of the Lyondell Company (NYSE: LYO  ) are among the largest producers of titanium dioxide. On relative economies of scale alone, it's difficult to imagine how Altair's small manufacturing facility could match these behemoths on cost.

Secondly, Sherwin-Williams' deal with Altair is much different than Nanophase's relationship with Behr. For starters, Nanophase is already manufacturing and supplying the nanoparticles to Behr, and the paint will soon be sold in thousands of Home Depot (NYSE: HD  ) stores. More importantly, the partnership is already creating real revenues for Nanophase. The same can't be said for Altair.

Here's my advice, Fools: Continue to monitor Altair if you like, but don't invest. At its best, this deal puts only a thin coat on an already expensive stock. As my fellow Fool Seth Jayson pointed out, Altair is trading at 47 times revenue. At its worst, the deal is nothing more than the company's latest attempt to whitewash investors.

If you disagree, ask yourself this: Where's the revenue from Altair's past deals involving pool cleaners, animal pharmaceuticals, and most recently, hybrid batteries?

Think small with further Foolishness:

Agree? Disagree? Register your opinion on Altair's future prospects in Motley Fool CAPS.

Interested in nanotech, biotech or any other tech? Check out our Motley Fool Rule Breakers newsletter free for 30 days.

Fool contributor Jack Uldrich is the author of two books on nanotechnology, including Investing in Nanotechnology: Think Small, Win Big. He does not own stock in any of the companies mentioned in this article. Home Depot is an Inside Value pick. The Fool has a strict disclosure policy.

Read/Post Comments (0) | Recommend This Article (29)

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.

Be the first one to comment on this article.

Compare Brokers

Fool Disclosure

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 526794, ~/Articles/ArticleHandler.aspx, 10/24/2016 12:00:45 PM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...

Today's Market

updated Moments ago Sponsored by:
DOW 18,234.53 88.82 0.49%
S&P 500 2,150.67 9.51 0.44%
NASD 5,301.44 44.04 0.84%

Create My Watchlist

Go to My Watchlist

You don't seem to be following any stocks yet!

Better investing starts with a watchlist. Now you can create a personalized watchlist and get immediate access to the personalized information you need to make successful investing decisions.

Data delayed up to 5 minutes

Related Tickers

10/21/2016 12:55 PM
ALTI $0.14 Down +0.00 +0.00%
Altair Nanotechnol… CAPS Rating: No stars
SHW $278.38 Up +1.24 +0.45%
Sherwin-Williams CAPS Rating: ****
HD $127.88 Up +1.28 +1.01%
Home Depot CAPS Rating: ****
NANX $0.69 Down +0.00 -0.58%
Nanophase Technolo… CAPS Rating: No stars