Sigma-Aldrich (Nasdaq:SIAL)

Sigma-Aldrich is an American company based in St. Louis, Missouri and founded in 1975. Its principal sector of activity is production and marketing of products and equipment for biological and chemical scientific researchPresent in 40 countries and with 7,600 employees, it synthesizes most of the chemical products it markets.  Sigma-Aldrich has one million customers worldwide, with 24% of sales in the United States, 43% in Europe and 22% in Canada, Asia-Pacific and Latin America. (source Wikipedia)

Despite his relatively young age, the company pays growing dividends for 29 years already, which could make old hands green with envy like Chevron or IBM. The annual growth in distributions is also strong, with 12,08%. Even if the growth in earnings per share is slightly lower, the distribution ratio remains at extremely low levels, at 20.73%. The performance on the other hand is low, at 1.13%, which makes us say that the title is overvalued at the moment. This is confirmed by a price/earnings ratio of 20.6.

There volatility in CHF on the other hand is interesting, at 12.35%, which is low for a company listed on the Nasdaq. The stock has a pronounced defensive and acyclical character, for example underperforming the market during the tech bubble, but flying high as soon as it burst. The beta of 0.88 confirms this limited sensitivity of SIAL compared to the market. Like many defensive stocks we follow, Sigma-Aldrich was able to take advantage of the "lost decade" of 2000-2010, which also explains its current overvaluation. Note that since 1990, the share price has risen 900%, beating the market hands down.

The stock's low volatility in CHF terms is also due to its inverse sensitivity to dollar exchange rate effects. This is due to the sector of activity (raw materials in the chemical industry), but also to the very significant share of exports, with more than 3/4 of sales outside the United States. It is precisely this inverse sensitivity to the greenback that led us to follow SIAL.

In conclusion, Sigma-Aldrich has almost everything we're looking for right now: a long history of growing dividends, with a sustained rate of increase and good earnings coverage. Volatility is low, and the stock offers a good hedge against changes in the dollar. Unfortunately, SIAL is currently overvalued, resulting in a low dividend yield. For this reason, we are keeping a close eye on the stock, in anticipation of a more attractive valuation.