The Energy & Materials sector finally had a good day on Tuesday after several dismal weeks. One stock in the materials sector that looks good based on valuation and insider buying is Kraton Performance Polymers (KRA), which is down some 30% over the past couple of months.
"Kraton Performance Polymers engages in the development, production, and marketing of styrenic block copolymers (SBCs) and non-SBC products worldwide" (Business description from Yahoo Finance)
6 reasons Kraton looks solid at $21 a share:
- KRA is selling near the bottom of its five year valuation range based on P/E, P/CF, P/B and P/S.
- Insiders have made net purchases of just under 80,000 in May.
- The stock sells for just over 6 times forward earnings, a discount to its five year average (8.9)
- KRA is considerably under consensus price targets. The 9 analysts that cover the stock have a median price target of $31 on Kraton.
- The market seems to be discounting the company's growth prospects given its five year projected PEG (.66).
- Analysts expect between 8% and 12% revenue growth from the company in FY2012 and FY2013. The stock also appears cheap at just 44% of sales and just 20% over book value.
Disclosure: I have no positions in any stocks mentioned, but may initiate a long position in KRA over the next 72 hours.
