August 31, 2023
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 Johannesburg Securities Exchange All Shares Index JSE All Shares
AECI is listed as a top 10 stock on August 31, 2023 in the market index JSE All Shares 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, despite a currently slow growth momentum. Based on the Obermatt 360° View of 80 (top 80% performer), Obermatt assesses an overall strong buy recommendation for AECI on August 31, 2023.
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 | August 31, 2023 | |||||||
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| VALUE | ||||||||
| VALUE | 99 |
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| GROWTH | ||||||||
| GROWTH | 31 |
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| SAFETY | ||||||||
| SAFETY | 52 |
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| SENTIMENT | ||||||||
| SENTIMENT | 80 |
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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 2023, overall professional sentiment and financial characteristics for the stock AECI are very positive. The 360° View is based on consolidating four consolidated indicators, with half of the indicators below and half 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 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 company is also safely financed with a Safety rank of 52. In addition, professional market sentiment is above average compared with other stock investment alternatives with a Sentiment Rank of 80. But the consolidated Growth Rank has a low rank of 31, which means that the company is below average in terms of growth and momentum when looking at financial metrics such as revenue, profit, and invested capital growth as well as stock returns. 69 of its competitors have better growth. ...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. Three out of four consolidated Obermatt Ranks show above-average performance. The stock has as good value (Value Rank of 99), secure financing practices (Safety Rank of 52), and positive market sentiment in the professional investor community (Sentiment Rank of 80). It is a solid stock investment where the risk of paying too much for the shares is limited, and disappointments are less likely to occur. The company’s growth expectations are below the industry average (Growth Rank of 31), but that could also be temporary since professional investors remain optimistic despite the low growth numbers. The low price as reflected in the good Value Rank could indicate that the company's future is challenging. The below-par growth performance may be the reason for this. Companies that grow less are typically cheaper than fast-growing competitors. We recommend evaluating whether the future of AECI is as difficult as the stock’s low price suggests, despite the positive professional investor sentiment. Since the professional community is optimistic, you might have less to worry about, and the stock may just go through a more challenging phase now, indicating good timing. ...read more
Sentiment Strategy: Professional Market Sentiment for AECI very positive
ANALYSIS: With an Obermatt Sentiment Rank of 80 (better than 80% compared with alternatives) for 2023, overall professional sentiment and engagement for the stock AECI is very positive. The Sentiment Rank is based on consolidating four sentiment indicators, with all but one indicator 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. In addition, Analyst Opinions Change has a rank of 95, which means that stock research experts are changing their opinions for the better in recommending investing in the company. In other words, they are getting even more optimistic about investments in AECI. Finally, the Professional Investors rank is 63, which means that currently, professional investors hold more stock in this company than in 63% of alternative investment opportunities. ...read more
RECOMMENDATION: With a consolidated Sentiment Rank of 80 (more positive than 80% compared with investment alternatives), AECI has a reputation among professional investors that is significantly higher than that of its competitors. Pros tend to favor investing in this company. But there is also a signal for caution. Market Pulse has a rank of 9, which means that the current professional news and professional social networks tend to be negative when discussing this company (more negative news than for 91% of competitors). This could mean future risks and should make investors careful. Attention to negative news for AECI is worthwhile because they may be early warning signals. Without those, all other professional signals are encouraging, especially since analysts are getting more optimistic. ...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 2023, 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 100 which means that the stock price compared with what market professionals expect for future sales is lower than for 100% 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 88. 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 low
ANALYSIS: With an Obermatt Growth Rank of 31 (better than 31% compared with alternatives), AECI shows a below-average growth dynamic in its industry. There is limited momentum in this company. The Growth Rank is based on consolidating four value indicators, with three out of four indicators below average for AECI. Sales Growth has a below market rank of 1, which means that, currently, professionals expect the company to grow less than 99% of its competitors. The same is valid for Capital Growth, with a rank of 33, and Profit Growth, with a rank of 42. Currently, professionals expect the company to grow its profits less than 58% of its competitors). Only shareholders are optimistic. Stock Returns are above average at a rank of 95, which means that the stock returns have recently been above 95% of alternative investments. ...read more
RECOMMENDATION: The overall picture with a consolidated Growth Rank of 31, is a hold recommendation for growth and momentum investors. That picture may be the result for a company that has reached the bottom. All went south for AECI, and it still looks bad, but some investors already see light at the end of the tunnel, rewarding the stock with recent above-market stock returns. It could also mean that investors are correcting an overreaction to negative news. If that were the case, the positive stock returns are not yet a sign of recovery. Investors should look closely at the Value and Sentiment indicators before they make a stock purchasing decision, because growth is unlikely to be the driving argument behind this investment. ...read more
Safety Strategy: AECI Debt Financing Safety above-average
| SAFETY METRICS | August 31, 2023 | |||||||
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| LEVERAGE | ||||||||
| LEVERAGE | 24 |
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| REFINANCING | ||||||||
| REFINANCING | 86 |
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| LIQUIDITY | ||||||||
| LIQUIDITY | 56 |
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| CONSOLIDATED RANK: SAFETY | ||||||||
| CONSOLIDATED RANK: SAFETY | 52 |
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ANALYSIS: With an Obermatt Safety Rank of 52 (better than 52% compared with alternatives), the company AECI has financing practices on the safer side, which mean that their overall debt burden is lower than average. This doesn't mean that the business of AECI is safe, it only means that the company is on the safer side regarding possible bankruptcy, assuming that public reporting is correct. The Safety Rank is based on consolidating three financing indicators, with two out of three indicators above-average for AECI. Refinancing is at 86, meaning the portion of the debt that is about to be refinanced is below average. It has less debt in the refinancing stage than 86% of its competitors. Liquidity is also good at 56, meaning the company generates more profit to service its debt than 56% of its competitors. This indicates that the company is safer when it comes to debt service. However, Leverage is rather large at 24, which means the company has an above-average debt-to-equity ratio. It has more debt than 76% of its competitors. ...read more
RECOMMENDATION: With a consolidated Safety Rank of 52 (better than 52% compared with alternatives), AECI has a financing structure that is safer than that of its competitors. This is not bad if things go well. The higher debt level means better returns to shareholders if things go well. Many top-performing companies operate with higher debt levels, and AECI could be in that group. But if you expect the environment to turn rougher, the higher leverage could become a problem. The same is valid if you expect interest rates to rise. That could squeeze shareholder returns, which so far have benefitted from better conditions. ...read more
Combined financial peformance: AECI Top Financial Performance
| COMBINED PERFORMANCE | August 31, 2023 | |||||||
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| VALUE | ||||||||
| VALUE | 99 |
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| GROWTH | ||||||||
| GROWTH | 31 |
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| SAFETY | ||||||||
| SAFETY | 56 |
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| COMBINED | ||||||||
| COMBINED | 85 |
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ANALYSIS: With an Obermatt Combined Rank of 85 (better than 85% 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), are safely financed (Safety Rank of 52, which means low debt burdens), but show below-average growth (Growth Rank of 31). ...read more
RECOMMENDATION: A Combined Rank of 85, is a strong buy recommendation based on AECI's financial characteristics. As the company AECI's key financial metrics exhibit good value (Obermatt Value Rank of 99) but low growth (Obermatt Growth Rank of 31) while being safely financed (Obermatt Safety Rank of 52), it may be a safer investment because companies with low debt can better withstand times of crises. Yet the good value, better than 99% of comparable companies, may also indicate that the company's future is challenging. If you believe that low growth is temporary or just due to a specific current event, you may conclude that the good value of the stock provides an attractive investment opportunity and the downside is limited due to below-average financing risks. ...read more
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