In this volatile market, finding companies with low valuations and a solid dividend yield is a good strategy. If you combine that with a stock that has a growth kicker, so much the better. One stock that has all three traits is Rockwood Holdings (NYSE:ROC).
"Rockwood Holdings develops, manufactures, and markets specialty chemicals and materials for industrial and commercial applications primarily in Germany, the United States, and Europe.." (Business description from Yahoo Finance)
6 reasons ROC is a solid dividend and growth play at $45 a share:
- Rockwood is the #1 producer of Lithium compounds & chemicals. Its lithium grade battery compounds have grown at a 17% annual clip over the last decade. Lithium sales account for 1/8 of Rockwood's sales and have margins of north of 38%.
- ROC is selling at under 9 times forward earnings, a deep discount to its five year historical average (15.9).
- The stock yields 3.1% and is priced at 8 times operating cash flow.
- The company has easily beat earnings estimates the last two quarters and consensus earnings estimates for both FY2012 and FY2013 have risen in the last three months.
- The 8 analysts that cover the stock have a $63 median price target on the stock, Credit Suisse has an "outperform" rating and a $71 price target on Rockwood.
- The stock has a dirt cheap five year projected PEG (.38). It also looks like it is establishing a short term technical bottom in the $44 to $46 range (See Chart).
Disclosure: I am long ROC.