Martin Vlcek
Contrarian, growth at reasonable price, macro, small-cap

KMG Chemicals: Current Bounce Offers Short-Term 20% Upside But Sub-Par Long-Term Returns

KMG Chemicals, Inc. (NYSE:KMG) is a leading global provider of specialty chemicals for the semiconductor and wood-treating markets. In order to offset stagnant sales and falling margins in its legacy wood-treatment chemicals business, the company has been making a handful of strategic acquisitions since 2008 that established the company as the first global supplier in the market for high-purity process chemicals for the semiconductor industry, with dominant U.S. market position.

Short-term upside available after the March earnings release

In the recent months, the stock price has been depressed by multiple one-time factors, causing very strong negative sentiment, including management changes, an earnings miss, acquisition uncertainty, restructuring and downgrades by analysts. Investors have been patiently waiting for stabilization...

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