Posted on December 14, 2020
Element Solutions Inc. (NYSE:ESI) is a chemical company with great cash flow whose climb of late has come too far, too fast.
And that cash flow will be necessary to cover the company’s substantial debt.
Just last week, ESI shares jumped better than 7% on guidance, and we believe that’s set the stage for a top.
Element Solutions makes chemicals that enhance the performance of a broad variety of communications equipment, mobile devices and electric vehicles.
So business has been strong during the ‘coronal flare’, as robust demand for electronics and communications infrastructure enhanced ESI’s bottom line.
But whether that justifies the stock’s price action of late is a separate issue.
Fundamentally speaking, the stock is overpriced according to traditional metrics, though not wildly so –
With kind regards,
Hugh L. O’Haynew