I go back quite a way with Brush Engineered Materials (NYSE: BW) -- far enough, at least, to still often refer to it as Brush Wellman, which it was called before a reorganization in 2000. Either way, this is still an interesting specialty metal company that I think could still have some room to run.
It's not all that unusual these days to find a metal/alloy company posting solid results and/or attracting investor bids. After all, take a look at Allegheny Technologies (NYSE: ATI), Carpenter Technology, or OM Group (NYSE: OMG).
Happily, Brush seems to qualify for the "and" part. The stock is a few points off its high, but revenue in the recently released first quarter was up 29%. About a quarter or so of that growth came from acquisitions and another quarter from higher metal prices, which still leaves a pretty impressive net-net result.
Margins are still a bit of a mixed picture, as the gross margins are down but the operating margins are up. The trouble on the gross line is something a lot of investors will understand -- Brush uses a fair bit of copper in its products, and the price of copper has being going nuts. That's good news, of course, if you're Phelps Dodge (NYSE: PD) or Southern Copper (NYSE: PCU), but not so good if you need that copper. Then again, a lot of Brush's products compete with products with even more copper in them, so it's not all bad news.
The central element to the Brush story is beryllium -- it's got a lot of it and is the only fully integrated producer of it, to my knowledge. And beryllium has ample uses -- it's stiffer than steel yet lighter than aluminum, and it has attractive conductive and corrosion properties. Accordingly, it's used in a wide range of applications from cell phones to disk drives to aerospace and automotive components. Hitachi (NYSE: HIT) and Seagate (NYSE: STX) are among the company's customers.
When it comes to the stock, all I can really say is, "Curse you, Cramer." The well-known stock-jock Jim Cramer has mentioned Brush before, and that's certainly brought attention and bids to the stock. If it somehow slipped below $20 soon, I'd get really interested. Trading where it is, though, I think there's more room to advance, but it's not an obvious enough bargain for me to want to tangle with yet another natural resources/cyclical play in my own portfolio.
For more heavy metal Foolishness:
Fool contributor Stephen Simpson has no financial interest in any stocks mentioned (that means he's neither long nor short the shares).
Terms & Conditions
RSS Headlines
Fool UK