Research from Water Tower Research, Water Tower Research

Water Tower Research

Research from Water Tower Research

Water Tower Research is a leading equity research firm that provides research on micro, small and mid cap companies.

Water Tower Research was founded by Wall Street veterans after witnessing a fundamental shift in the investment research industry with the result being a declining knowledge base among investors, a lack of awareness and a shrinking pool of fundamental research being conducted on companies across the small-cap and micro-cap spectrum. The same issues are now increasingly occurring in the mid-cap space. This sea change within the investment community is impacting not only the companies themselves but also current shareholders and potential investors. With significantly less active sell-side sponsorship by Wall Street, a substantial information gap has developed between companies and various constituents in the financial community. The net result is fewer channels for insight and information to flow between companies and investors.

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<ul><li>WTR-CMI last week. In a down week for the market, with both the S&amp;P 500 and Russell 2000 declining 4.2% and 5.7%, respectively, 29 of the 30 stocks in our WTR-CMI Index likewise saw their prices fall 4.0%, with AVD being the only exception, appreciating 9.1% for the week.</li><li>YTD, the S&amp;P 500, heavily weighted toward tech and internet stocks, has increased 13.4%, while our WTR-CMI Index has increased 7.2%, outperforming the broader Russell 2000’s 3.2% rise, despite lithium stocks’ 50%- plus declines.</li><li>Recycled plastics market gaining acceptance. LYB announced the acquisition of German APK AG, a mechanical plastics recycler to bolster its circular economy and low-carbon credentials, while AVTN launched a pigment additive for plastics used in automotive plications made from recycled tires, as an alternative to carbon black, again aiming at helping its customers reduce their carbon impact while improving its own circular economy efforts.</li></ul>

WTR-CMI last week. In a down week for the market, with both the S&amp;P 500 and Russell 2000 declining 4.2% and 5.7%, respectively, 29 of the 30 stocks in our WTR-CMI Index likewise saw their prices fall 4.0%, with AVD being the only exception, appreciating 9.1% for the week.YTD, the S&amp;P 500, heavily weighted toward tech and internet stocks, has increased 13.4%, while our WTR-CMI Index has increased 7.2%, outperforming the broader Russell 2000’s 3.2% rise, despite lithium stocks’ 50%- plus declines.Recycled plastics market gaining acceptance. LYB announced the acquisition of German APK AG, a mechanical plastics recycler to bolster its circular economy and low-carbon credentials, while AVTN launched a pigment additive for plastics used in automotive plications made from recycled tires, as an alternative to carbon black, again aiming at helping its customers reduce their carbon impact while improving its own circular economy efforts.

Mat-Chem Notes - Weakness of Industrial, Ag, and EV Markets Leaves Few Options

<ul><li>Heavy lithium. Halfway through the year, the S&amp;P 500 has appreciated 15.4% YTD, driven by the strong performance of the Magnificent Seven, even as the remaining 490+ companies saw their stock prices move more in line with the Russell 2000, which itself posted an 7.8% gain YTD.</li><li>Over the same timeframe, the WTR-CMI Index delivered a disappointing 4.4% gain under the weight of lithium and graphite companies losing 36-62% of their value due to collapsing lithium and synthetic graphite prices, driven by slower growth of EVs and steel production and liquidation of excess inventories by customers, built over the course of 2022-23.</li><li>Sticky costs remain as pricing power wanes. Over the course of 2022-23, many companies experiencing a rapid rise in raw material costs, driven by higher petrochemical prices and rising costs of transportation and logistics aggressively raised prices in an attempt to preserve profits, if not profit margins. </li></ul>

Heavy lithium. Halfway through the year, the S&amp;P 500 has appreciated 15.4% YTD, driven by the strong performance of the Magnificent Seven, even as the remaining 490+ companies saw their stock prices move more in line with the Russell 2000, which itself posted an 7.8% gain YTD.Over the same timeframe, the WTR-CMI Index delivered a disappointing 4.4% gain under the weight of lithium and graphite companies losing 36-62% of their value due to collapsing lithium and synthetic graphite prices, driven by slower growth of EVs and steel production and liquidation of excess inventories by customers, built over the course of 2022-23.Sticky costs remain as pricing power wanes. Over the course of 2022-23, many companies experiencing a rapid rise in raw material costs, driven by higher petrochemical prices and rising costs of transportation and logistics aggressively raised prices in an attempt to preserve profits, if not profit margins. 

Mat-Chem Notes - Between a Rock and a Hard Place - 2H24 Outlook

<ul><li>We joined WTR’s Head of Business Development Tim Regan on this week’s Water Tower Hour Podcast to recap what happened in the chemicals and materials technology industries in 2023 and to provide an outlook for 2024.</li><li>Those interested can listen to the podcast on Apple Podcasts, Google Podcasts, Spotify, or on our website.</li><li>WTR-CMI in 2023. With the majority of stocks in our index finishing 2023 in positive territory, the WTR-CMI Index managed to keep pace with the Russell 2000, appreciating 15%.</li></ul>

We joined WTR’s Head of Business Development Tim Regan on this week’s Water Tower Hour Podcast to recap what happened in the chemicals and materials technology industries in 2023 and to provide an outlook for 2024.Those interested can listen to the podcast on Apple Podcasts, Google Podcasts, Spotify, or on our website.WTR-CMI in 2023. With the majority of stocks in our index finishing 2023 in positive territory, the WTR-CMI Index managed to keep pace with the Russell 2000, appreciating 15%.

Water Tower Hour Recap -  2023 Review and 2024 Outlook

<ul style="list-style-type: disc;"><li>WTR-CMI last week. In an up-week for the market, our WTR-CMI index of 30 chemical and material technology companies appreciated 4.8%, surpassing both the S&amp;P 500 and Russell 2000 returns of 2.3% and 3.7%, respectively.</li><li>FUL’s 13.2% appreciation led our index, as the company delivered strong margins in 2QFY23 (May- 23) and provided solid EBITDA guidance for the year.</li><li>The stock was also helped by FUL’s announcement of two bolt- on acquisitions, Adhezion Biomedical, a privately held medical adhesives company, and XCHEM International, a UAE specialty adhesives manufacturer with a strong position in MENA. </li></ul>

WTR-CMI last week. In an up-week for the market, our WTR-CMI index of 30 chemical and material technology companies appreciated 4.8%, surpassing both the S&amp;P 500 and Russell 2000 returns of 2.3% and 3.7%, respectively.FUL’s 13.2% appreciation led our index, as the company delivered strong margins in 2QFY23 (May- 23) and provided solid EBITDA guidance for the year.The stock was also helped by FUL’s announcement of two bolt- on acquisitions, Adhezion Biomedical, a privately held medical adhesives company, and XCHEM International, a UAE specialty adhesives manufacturer with a strong position in MENA. 

Mat-Chem Notes For the Week Ended June 30, 2023

<ul><li>WTR-CMI last week. As the markets continue to recover from the 2022 doldrums, both the S&amp;P 500 and the Russell 2000 posted weekly gains of 3.1% and 0.5%, respectively.</li><li>Our WTR-CMI index of 30 chemicals and materials technology stocks appreciated 1.4% over the last week.</li><li>YTD, our index is up 8.1%, above the Russell 2000’s 7.3% appreciation, but below the large-cap S&amp;P 500’s 15.3% recovery.</li></ul>

WTR-CMI last week. As the markets continue to recover from the 2022 doldrums, both the S&amp;P 500 and the Russell 2000 posted weekly gains of 3.1% and 0.5%, respectively.Our WTR-CMI index of 30 chemicals and materials technology stocks appreciated 1.4% over the last week.YTD, our index is up 8.1%, above the Russell 2000’s 7.3% appreciation, but below the large-cap S&amp;P 500’s 15.3% recovery.

Mat-Chem Notes For the Week Ended June 16, 2023

United States

Ingevity Corporation manufactures specialty chemicals. The Company offers adhesives, inks, soaps, detergents, agricultural chemicals, metalworking fluids, and lubricants. Ingevity markets its products worldwide.

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Ingevity Corp (NGVT US)

Mat-Chem Notes - Weakness of Industrial, Ag, and EV Markets Leaves Few Options

YTD, the S&P 500, heavily weighted toward tech and internet stocks, has increased 13.4%, while our WTR-CMI Index has increased 7.2%, outperforming...

Water Tower Research

Mat-Chem Notes - Between a Rock and a Hard Place - 2H24 Outlook

Over the same timeframe, the WTR-CMI Index delivered a disappointing 4.4% gain under the weight of lithium and graphite companies losing 36-62% of...

Water Tower Research

Water Tower Hour Recap - 2023 Review and 2024 Outlook

WTR-CMI in 2023. With the majority of stocks in our index finishing 2023 in positive territory, the WTR-CMI Index managed to keep pace with the...

Water Tower Research

Mat-Chem Notes For the Week Ended June 30, 2023

FUL’s 13.2% appreciation led our index, as the company delivered strong margins in 2QFY23 (May- 23) and provided solid EBITDA guidance for the year.

Water Tower Research

Mat-Chem Notes For the Week Ended June 16, 2023

WTR-CMI last week. As the markets continue to recover from the 2022 doldrums, both the S&P 500 and the Russell 2000 posted weekly gains of 3.1% and...

Water Tower Research

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