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Validea's pick of the week provides a detailed report on a company that scores well in the stock-screening service's model portfolios. On Validea.ca, investors can analyze 1,000 Canadian stocks through 12 different guru-based models and get individual reports on each company. Globe Investor has a distribution agreement with Validea.ca. Try it.
Aceto Corp. is a 67-year-old firm with a market cap of $600-million (U.S.) which makes products for human health (finished dosage form generics and nutraceutical products), pharmaceutical ingredients (pharmaceutical intermediates and active pharmaceutical ingredients) and performance chemicals (specialty chemicals and agricultural protection products). It operates in nine countries, and distributes over 1,100 chemical compounds used principally as finished products or raw materials in the pharmaceutical, nutraceutical, agricultural, coatings and industrial chemical industries.
Aceto has a 14 per cent return on equity and it has a 2.3 current ratio and just $97-million in long-term debt versus $158-million in net current assets, which the Benjamin Graham-based approach likes.
The company has grown EPS at a 36-per-cent clip over the long term (using avg of 3, 4, and 5 yr EPS growth rates), part of why it gets strong interest from the Peter Lynch model. The Lynch model also likes its 0.58 P/E-to-growth ratio.
Aceto has averaged an 18.4-per-cent return on retained earnings (those not paid as dividends) over past decade, impressing the Warren Buffett inspired model.
The James O'Shaughnessy-based growth model likes that it has upped EPS in each year of past half decade. The O'Shaughnessy approach also likes its combo of a strong 12 month relative strength of 84 and a reasonable price/sales ratio of 1.2.
Debt/equity ratio of 45 per cent is less than the industry average of 64 per cent, which the Martin Zweig model likes.
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