NewMarket (NYSE:NEU) is the parent company of Afton Chemical, one of the four major players in petroleum additives. While this stock is loved by Wall Street and Seeking Alpha contributors, we suggest that it is receiving a peak multiple on unsustainable peak margins. The industry dynamics have changed and NewMarket is a compelling short idea.
NewMarket has three major companies - Afton Chemical, Ethyl Corp and NewMarket Services. Of these, we will focus on Afton Chemical as it represents 99% of combined revenue.
Afton develops and manufactures petroleum additives that help fuels burn cleaner and more efficiently. The primary competitors are Lubrizol, now owned by Berkshire Hathaway (NYSE:BRK.A), Infineum a JV between Shell (NYSE:RDS.A...
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