Ecolab: The Only Good Thing About Civillian Health Threats

Ecolab Inc. (ECL) is one of our favorites in the specialty chemical industry. This company develops and markets chemicals and services for cleaning, pest elimination, sanitizing and maintenance to the hospitality, institutional and industrial markets.

The company has grown its earnings and dividends 11-12% over the last 10 years while earning a 20%+ return on equity. Future profit growth should be positively increased by expanding geographically, new product introductions, niche acquisitions, improved operating efficiencies, improving economic conditions in Europe and ECL’s stock buyback program.

In addition, increasing government attention to civilian health threats posed by Bird Flu, E. coli and other pestilences could prove a ‘bonus’. Despite this positive outlook for the company, ECL’s stock has done virtually nothing over the past year. Our Buy Value Range for this stock is $40.50-44.50. Our Stop Loss is at $34.50 and our price objective is $73.

EPS: 2006 $1.43, 2007 $1.65, 2008 $1.85
DVD: $.46
YLD 1.0%

Disclosure: Author has a long position in ECL

ECL 1-yr chart