opinion on OTL at this moment

**balaoko** Fri Dec 09, 2005 3:32 pm

opinion on OTL at this moment
OTL, a producer of petroleum additives and specialty chemicals, is a global giant. It has consecutive insider buying which draw my attention. Since I am not finished studying “security analysis”, I only applied what I think is correct to compute its free cash flow using data from yahoo. That implies my data may not be correct, sorry for that. Please feel free to correct me:)

By my computation, it has excellent financial result in the past three years (yahoo only have three year data). The average free cash flow in the last 3 years is 9.23 per share, with standard deviation of 1.94. That shows a quite stable cash flow. The average PE is roughly 1.8, which is quite low.

It looks quite attractive. But it is staying in my watching list, not in the holding list. Here are the reasons:

Octel supplies a range of lead alkyls, petroleum specialties and performance chemicals. The first part, lead alkyls business is the world’s leading producer of tetraethyl lead or ‘TEL’ compounds. It contributed half of sales in 2004. However, that part of business is shrinking because the market is shrinking due to the environment considerations. The company’s attitude is quite simple: make as much money as it can before it shrinks to zero and it did it.

The worries come from two aspects: one is the shrinking business in TEL, the other is the “technique trend”. Since the TEL business contributed half of sale, the future of the company is unknown after that market become small. Although TEL is will be a money printer in short term, I am not feeling comfortable since there is no hint about what is going on next after the printer disappears. I know blast does not like technique analysis in his forum, so I won’t show my analysis here but the result: it is at a critical point and need some time to determine the future direction.

As a result, it is a potential candidate, staying in the watching list. I am definitely waiting for something to happen so that buying it become comfortable from both fundamental and technique point of view.

**blast_investor** Sun Dec 11, 2005 7:51 pm

balaoko,

Congratulations, you won this prize of 2,500 VIF points.

**blast_investor** Sun Feb 12, 2006 11:13 pm

This stock was picked up again in BlastInvest insider buying screener.

Just find out today that this company changed name and ticker.

The company name now is : INNOSPEC

The stock Ticker is : IOP