January 23, 2008


A write up on ICO from Zack's:

Ico, a Zack's #1 Rank (Strong Buy), produces custom polymer powders for rotational molding and other polymer segments, including textiles, metal coatings and masterbatch. The powders are used to manufacture household items, such as toys, and household furniture; automobile parts; agricultural products, such as fertilizer and water tanks; paints; and metal and fabric coatings. The WEDCO services division also include blending, packaging, distribution, warehousing, and procurement.

The company's customers include major chemical companies, affiliates of major oil exploration and production companies, and manufacturers of plastic products.

Headquartered in Houston, Texas, ICOC is global in reach, with 19 locations in 10 countries, including France, the United Kingdom, Italy, Holland and Brazil. ICOC also has five operating facilities in the United States. Global operations and a weak currency are impacting the company's bottom line in a positive way. On Dec 6, 2007, the company reported that strong earnings and a weaker US dollar increased stockholders' equity by $6.7 million during the quarter to $91 million.

The company is operating at full throttle. "We just completed another record-setting quarter," stated the company's President and CEO, Mr. A. John Knapp, Jr.,"driven by broad based profitability improvements as fourth quarter operating income for all of our business segments improved year-over-year. While we will see usual seasonal weakness in our next fiscal quarter, we expect that we will continue to see very satisfactory year-over-year revenue and diluted earnings per share growth in the quarter ended Dec 31, 2007."

Fourth-quarter revenues were up 42% from the prior year to a record $123.6 million. The company also reported a record quarterly operating income, up 75% year-over-year. The company has surprised on earnings by a large margin the last three quarters in a row, averaging three cents, or 20.24%, higher than estimates.

The lone brokerage analyst covering the company apparently doesn't want to be surprised again, as the estimate for first quarter 2008 earnings went up by three cents from 15 cents to 18 cents in the last 60 days. The estimate on second quarter was also raised by two cents from 22 cents to 24 cents at the same time.

The recent market downturn has resulted in a sell-off in the stock that isn't justified. Ico has a P/E of 11.02 and a P/B of 2.83 making it an attractive value play in its sector. With continued earnings growth and a strong business model, Ico is a bargain.

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