Olin Corporation: Shooting to the Top

Aug.14.08 | About: Olin Corporation (OLN)

We like Olin Corp (NYSE:OLN) based on exceptional top line sales growth, along with strong earnings.

We think the stock is attractively priced given a PE ratio of 15 versus sales growth of nearly 60% over the past 12 months. Earnings growth has also been very good at 26% over the last year, although the company did miss expectations slightly in the July 25 quarterly report.

However, in that same report, the company provided upward guidance on earnings estimates for the next quarter. We think that profit margins will continue to improve as the company achieves further cost reductions from integration of the Pioneer Company purchased last year. With exceptional sales growth and improving margins, net income growth should be strong for the foreseeable future. Company sales should continue to benefit from increased military purchases that will help the stock price shoot to the top!

The stock is still attractively priced with a PE of 15 and a price to sales ratio that is lower than 40% of companies in their industry. We would also add that the stock enjoys strong analyst support and currently carries a rating that is better than 95% of the stocks in the market. There is downside as the overall market still shows significant volatility, particularly in commodities, although the market performance this past month has been strong.

We like that the stock price has been consolidating and forming a support base in the $28-$29 range over the past 15 days which we view as a good buying opportunity.

Disclosure: MarketBeatingStocks is long OLN at the time of this writing.