July 18, 2024
Top 10 Stock AECI Strong Buy Recommendation
How to read the ranks
For every stock, we judge its performance against its peers and rank it on a scale of 1 to 100. The higher the rank, the better the stock performs than its peers. And, we do this for six investment strategies:
Value - shows how good of a value the stock is. Green is "inexpensive"; red is "expensive".
Growth - shows a company's growth potential. Green is "high growth" expected; red is "tough times ahead".
Safety - relates to the amount of debt a company has. Green is low debt level; red is high debt level.
Combined Financial - this isn't an average of the first three ranks but rather a consolidated view across several financial indicators. Green = good; red = tread carefully.
(NEW) Sentiment - quantifies professional analyst ratings and holdings as well as market pulse. Green = positive sentiment; red = skepticism (Only available to Premium Subscribers).
(NEW) 360° View - the ultimate rating with all financial and non-financial indicators.
Snapshot: AECI – Top 10 Stock in Independent Boards in Growth Markets
AECI is listed as a top 10 stock on July 18, 2024 in the market index Independent Boards Growth Markets because of its high performance in at least one of the Obermatt investment strategies. As three out of four consolidated Obermatt Ranks exhibit excellent performance, it is a solid investment where the risk of paying too much for the shares is low. Based on the Obermatt 360° View of 80 (top 80% performer), Obermatt assesses an overall strong buy recommendation for AECI on July 18, 2024.
Snapshot: Obermatt Ranks
| Country | South Africa |
| Industry | Specialty Chemicals |
| Index | Low Emissions, Energy Efficient, Good Governace Growth Markets, Independent Boards Growth Markets, JSE All Shares |
| Size class | Large |
When Obermatt identifies the Top 10 stocks in a market, it’s based on a certain investment strategy. The best performing stocks usually aren’t the ones that everyone is talking about (those are often "over-priced" and have low Value ranks).
For each investment strategy, we provide you with more detailed analysis and our recommendation. You see the ranks of the top 10 stocks ranked by that particular investment strategy (360° View, Sentiment, Value, Growth, Safety and Combined Financial Performance).
360° View: Obermatt 360° View AECI Strong Buy
| 360 METRICS | July 18, 2024 | |||||||
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| VALUE | ||||||||
| VALUE | 99 |
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| GROWTH | ||||||||
| GROWTH | 61 |
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| SAFETY | ||||||||
| SAFETY | 46 |
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| SENTIMENT | ||||||||
| SENTIMENT | 52 |
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| 360° VIEW | ||||||||
| 360° VIEW | 80 |
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ANALYSIS: With an Obermatt 360° View of 80 (better than 80% compared with alternatives) for 2024, overall professional sentiment and financial characteristics for the stock AECI are very positive. The 360° View is based on consolidating four consolidated indicators, with all but one indicator above average for AECI. The consolidated Value Rank has an attractive rank of 99, which means that the share price of AECI is on the lower side compared with the typical size in indicators such as revenues, profits, and invested capital. This means the stock price is lower than for 99% of alternative stocks in the same industry. The consolidated Growth Rank has a good rank of 61, which means that the company experiences above-average growth momentum when looking at financial metrics such as revenue, profit, and invested capital growth, as well as stock returns. In addition, professional market sentiment is above average compared with other stock investment alternatives with a Sentiment Rank of 52. But the company’s financing is risky with a Safety rank of 46. This means 54% of comparable companies have a safer financing structure than AECI. ...read more
RECOMMENDATION: With a consolidated 360° View of 80, AECI is better positioned than 80% of all alternative stock investment opportunities based on the Obermatt Method. As three out of four consolidated Obermatt Ranks exhibit excellent performance, such as good value (Value Rank of 99), above-average growth (Growth Rank of 61), and positive market sentiment in the professional investor community (Sentiment Rank of 52), it is a solid stock investment where the risk of paying too much for the shares is limited, and disappointments are less likely, unless information not publicly available. Only the company financing structure is on the riskier side (Safety Rank of 46), but that would also mean better returns for shareholders if things work out well. Good value is sometimes an indication that the company's future is challenging. If they have been growing above average and are still a good value, it may indicate that this will not continue. We recommend evaluating whether the future of AECI is as difficult as the low price of the stock, despite good growth and positive professional investor sentiment, suggests. Since the professional community is optimistic, you might have less to worry about, and the stock is just not sufficiently visible right now, which may indicate good timing. ...read more
Sentiment Strategy: Professional Market Sentiment for AECI positive
ANALYSIS: With an Obermatt Sentiment Rank of 52 (better than 52% compared with alternatives), overall professional sentiment and engagement for the stock AECI is above average. The Sentiment Rank is based on consolidating four sentiment indicators, with half of the metrics below and half above average for AECI. Analyst Opinions are at a rank of 100 (better than 100% of alternative investments), which means that, currently, stock research analysts tend to recommend a stock investment in the company. Analyst Opinions Change is also positive and has a rank of 50 which means that currently, stock research experts are getting even more optimistic about investments in AECI. But Market Pulse has a low rank of 23, which means that the current professional news and professional social networks are on the negative side when discussing this company (more negative news than for 77% of competitors). This is an essential sign of caution, as it could be the forebearer of bad news. Professional Investors are also somewhat absent with a rank of 37, which means that, currently, professional investors hold less stock in this company than in 63% of alternative investment opportunities. Pros tend to invest in other companies. This is expected if the company is of a smaller size (medium or smaller). ...read more
RECOMMENDATION: With a consolidated Sentiment Rank of 52 (more positive than 52% compared with investment alternatives), AECI has a reputation among professional investors that is above-average compared with that of its competitors. While the general news feeds in the professional market are negative, the analyst recommendations are optimistic about the company, and even increase their ratings despite the negative news. This is an ambiguous situation with positive and negative signals from the professional side. Investors should be on the lookout for negative news but not worry too much about it as long as the overall news is still positive. ...read more
Value Strategy: AECI Stock Price Value at the top
ANALYSIS: With an Obermatt Value Rank of 99 (better than 99% compared with alternatives) for 2024, AECI shares are significantly less expensive than comparable stocks. The Value Rank is based on consolidating four value indicators that are all above average for AECI. Price-to-Sales is 95 which means that the stock price compared with what market professionals expect for future sales is lower than for 95% of comparable companies, indicating a good value for AECI's revenue size. The same is valid for expected Price-to-Profits, more favorable than for 95% of alternatives, and this is also true for the Price-to-Book capital ratio (also referred to as market-to-book ratio) with a Price-to-Capital Rank of 93. Compared with other companies in the same industry, dividend yields of AECI are expected to be higher than for 92% of all competitors (a Dividend Yield rank of 92). ...read more
RECOMMENDATION: The overall picture with a consolidated Value Rank of 99, is a buy recommendation based on AECI's stock price compared with the company's operational size and dividend yields. Since all value metrics are above the industry average, there is no objection to investing in AECI based on its detailed value metrics.
Growth Strategy: AECI Growth Momentum good
ANALYSIS: With an Obermatt Growth Rank of 61 (better than 61% compared with alternatives), AECI shows an above-average growth dynamic in its industry. Investors also speak of positive momentum. The Growth Rank is based on consolidating four value indicators, with all but one indicator above average for AECI. Profit Growth has a rank of 66 which means that currently professionals expect the company to grow its profits more than 66% of its competitors. The same is valid for capital growth and stock returns. Capital Growth has a rank of 72, and Stock Returns has a rank of 57 which means that the stock returns have recently been above 57% of alternative investments. Only revenue growth is low with a Sales Growth has a rank of 23 (77% of its competitors are better). ...read more
RECOMMENDATION: The overall picture with a consolidated Growth Rank of 61, is a buy recommendation for growth and momentum investors. The many positive growth indicators indicate a positive growth momentum with only low revenue growth. That can also be attributed to divestments or the sale of unprofitable businesses. If that is the reason, overall growth is well on track to making this stock attractive for growth investors. ...read more
Safety Strategy: AECI Debt Financing Safety below-average
| SAFETY METRICS | July 18, 2024 | |||||||
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| LEVERAGE | ||||||||
| LEVERAGE | 28 |
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| REFINANCING | ||||||||
| REFINANCING | 98 |
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| LIQUIDITY | ||||||||
| LIQUIDITY | 28 |
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| CONSOLIDATED RANK: SAFETY | ||||||||
| CONSOLIDATED RANK: SAFETY | 46 |
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ANALYSIS: With an Obermatt Safety Rank of 46 (better than 46% compared with alternatives), the company AECI has financing practices on the riskier side, which means that their overall debt burden is above the industry average. This doesn't mean that the business of AECI is also risky, it only means that the company is on the riskier side in respect to bankruptcy in case things turn sour, assuming that public reporting is correct. The Safety Rank is based on consolidating three financing indicators, with just one indicator above average for AECI and the other two below average. Refinancing is at 98, meaning the portion of the debt about to be refinanced is below average. It has less debt in the refinancing stage than 98% of its competitors. But Leverage is high with a rank of 28, meaning the company has an above-average debt-to-equity ratio. It has more debt than 72% of its competitors. Liquidity is also on the riskier side with a rank of 28, meaning the company generates less profit to service its debt than 72% of its competitors. ...read more
RECOMMENDATION: With a consolidated Safety Rank of 46 (worse than 54% compared with alternatives), AECI has a financing structure that is riskier than that of its competitors. A good Refinancing Rank means that the problems of the company may not be around the corner. But high Leverage is only good if things go well, and low Liquidity is a signal for caution. The financing signals for AECI are on the riskier side, requiring the company's future to be on the safer side. Investors may want to look at Growth and Sentiment ranks before making an investment decision. ...read more
Combined financial peformance: AECI Top Financial Performance
| COMBINED PERFORMANCE | July 18, 2024 | |||||||
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| VALUE | ||||||||
| VALUE | 99 |
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| GROWTH | ||||||||
| GROWTH | 61 |
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| SAFETY | ||||||||
| SAFETY | 28 |
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| COMBINED | ||||||||
| COMBINED | 88 |
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ANALYSIS: With an Obermatt Combined Rank of 88 (better than 88% compared with investment alternatives), AECI (Specialty Chemicals, South Africa) shares have much better financial characteristics than comparable stocks. Shares of AECI are a good value (attractively priced) with a consolidated Value Rank of 99 (better than 99% of alternatives), show above-average growth (Growth Rank of 61) but are riskily financed (Safety Rank of 46), which means above-average debt burdens. ...read more
RECOMMENDATION: A Combined Rank of 88, is a strong buy recommendation based on AECI's financial characteristics. As the company AECI's key financial metrics exhibit excellent performance in two areas, such as good value (Obermatt Value Rank of 99) and above-average growth (Obermatt Growth Rank of 61), it could be argued that the risk-taking in financing (Obermatt Safety Rank of only 46) indicates that the company is optimistic about the future and sees debt as an opportunity to boost returns. More debt means more shareholder returns if everything goes well. However, higher debt burdens are risky when interest rates rise or the business deteriorates in a crisis. If you believe the company's future is market-typical or even better, this could be an argument for a share purchase. ...read more
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