Stephen Simpson, CFA
Long only, growth at reasonable price, value, research analyst

KMG Chemicals Hopes To Leverage Chip Turnaround And Synergies

KMG Chemicals (NYSE:KMG) is a small player in the specialty chemicals space, with only about $350 million in annualized revenue and about half that amount of market cap. Despite this limited scale, KMG is a significant player in parts of the electronic chemicals and wood treatments markets. Improvements in the consumer electronics market, coupled with synergies from the acquisition of a business from OM Group (NYSE:OMG) should drive improving results in the coming years, and management is hoping to augment this with the acquisition of a third standalone unit.

KMG Chemicals has established sizable market positions in its targeted markets, but it is not so clear that those are valuable markets for the long term. With...

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