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A new value stock has appeared on my radar! Merry Christmas to me; I couldn't be more excited.
One of the things I love about my job is the search for new jewelry. So, let me tell you what I found.
What is it?
Croda International (LSE:CRDA) is my Christmas bargain. It is a global leader in specialty chemicals, serving diverse customers in personal, health and crop care.
I used to be involved in performance (coatings, lubricants and plastics, for example) and industrial chemicals. However, it sold these divisions to become a purely life sciences and consumer-facing company.
Because I like?
I'm trying to emphasize the ethical considerations more recently. I am motivated to do good in the world, and as an investor, I care about putting my money where my heart is.
No company is perfect, but it seems like Croda is trying to get it right. It takes sustainability seriously and ranks first in the Most sustainable international company rankings of non-U.S. companies in a Barron's report.
In addition, he joined the World Business Council for Sustainable Development. Here she collaborates on sustainable business practices with other business leaders.
When do I expect to make a profit?
Here's the thing: The stock is currently trading more than 50% below its high.
While this may initially raise alarm bells, it seems like an excellent opportunity to me.
If this sounds peculiar on the surface, it's actually a famous principle in value investing to buy companies when the price is low.
However, there is a crucial condition for this to be true. The company's financials also have to be stellar.
Also, I don't think I will make profits immediately if I buy these stocks. My golden rule for myself when it comes to value investing is patience. Sometimes it takes years for a valuable work to come to light.
The good news is that I think Croda is in a wonderful financial position, but there are also risks that I need to consider.
For example, the company has an operating margin of over 17%, which I find amazing. Additionally, its five-year average annual revenue growth rate is over 7%.
But that doesn't mean, of course, that the share price will continue to rise.
The company faced problems in the global supply chain, with costs increasing due to the conflict in Ukraine. This contributed to the significant share price decline starting in 2022. While Croda recovered its costs, these impacts likely affected investor sentiment.
There is also uncertainty surrounding the company's new direction after selling its industrial and performance divisions. I think the investing public is still skeptical about the company's financial future.
My decision
I would love to buy this company, and will probably do so this Christmas or until 2024, as soon as I am sure that I will not need the initial investment amount for more pressing reasons in the coming years.
One of the ways I love to invest in a company is to deposit a small amount first. £500 is a good amount to start with in my opinion, but even £50 to test the waters works for me.
That way, I get a little into the game and continue researching, eventually establishing a position in companies that I am really convinced of.
At the very least, this one is on my watch list.
