It doesn't get much more basic than this. AMCOL
The company also has an environmental business that sells sodium bentonite and other products to be used as landfill liners, construction materials, and wastewater management components. There's also the Nanocor subsidiary, which works on nanocomposites for new products like specialty packaging liners. So it's not just dirt, but it's not exactly Genentech or Google, either.
Tempted to scoff at this business? I'd suggest you dig further. Sales were up 19% in the quarter, and improvements in the gross and operating margin led to 33% operating income growth and more than 36% net income growth. Moreover, the company returned itself to positive free cash flow for the full fiscal year. If that isn't quite enough to get your interest, consider this -- AMCOL boasts a double-digit return on invested capital.
Frequent readers of my Takes probably won't be too surprised to know that I'm a little bit curious about a company like AMCOL. After all, I've been a fan of other "scoop and sell" ideas like salt-mining leader Compass Minerals
I like this business; the company is a leader in a sustainable industry, and I don't see a lot of incentive to redesign products to exclude bentonite. There's also the potential upside of the Nanocor subsidiary. The downside, though, is price. Though it's not that expensive on a relative basis, my calculations suggest that today's price already assumes pretty good future cash flow growth.
We've dug up further Foolishness:
Fool contributor Stephen Simpson has no financial interest in any stocks mentioned (that means he's neither long nor short the shares).