Local Amcol soars with absorbent bentonite
Some savvy investors are betting on bentonite this year thanks to Amcol International Corp.'s rising stock price.
Arlington Heights-based Amcol provides and markets bentonite, an absorbent clay used in household and industrial products.
After a strong third quarter earnings report on Oct. 19,the stock set four consecutive 52-week highs, topping $40. Amcol continues to expand into Asia, and its oil field segment has produced hefty profits.
Thestock has dropped back below $38, but it's still up 35 percent inthe 52 weeks since last December. In that time, the S&P 500 indexgrew 4.4 percent. Analysts estimate Amcol will earn $1.88 per diluted share this year versus $1.48 per dilutedshare in 2006.
Though only a few analysts cover the company, they applaud its progress.
"It's a gem," said Jay Harris of Goldsmith Harris Inc. in New York. Harris said he has been a promoter of Amcol for years and predicts, despite the recent volatility of the stock market, Amcolwill hold between $35 and $40through the end of the year.
"It's had remarkable success since 2000," he said.
Bentonite's absorbent qualities are used in a variety of ways. It's in kitty litter and landfill liners. It soaks impurities out of wines and oil.
Amcol combs the globe for bentonite reserves to use in its three main business segments.
Amcol's oil fields segment provides on-shore and off-shore bentonite products for oil production -- particularly for filtration -- and owns patented technologies. This segment saw its operating profit rise 88 percent from the year-earlier period. Oil fields profits soared 141 percent in the third quarter.
The blemish on Amcol's success rests in its mineral segment. Though it contributes the most revenue, its operating profit has grown marginally, just 2.3 percent in the first nine months of the year. Profits dropped 5.2 percent in the third quarter, down to $9.1 million from $9.6 million. This segment suffered from weak metal casting sales.
"If there's a disappointing area, that would certainly be the one,"acknowledged Amcol CEO Larry Washow, during the company's third quarter conference call.
Amcol's environmental segment, which provides pond liners and waterproofing, has gained from growth in the U.S. and international expansion this year.