Sigma-Aldrich (Nasdaq:SIAL)

Sigma-Aldrich is an American company based in St. Louis, Missouri, and founded in 1975. Its core business is the production and marketing of products and equipment for biological and chemical scientific research. With a presence in 40 countries and 7,600 employees, it synthesizes most of the chemicals 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.

Sigma-Aldrich Corp sells over 100,000 chemical products46,000 of which are manufactured in-house. Sigma-Aldrich differentiates itself from its competitors by its same-day shipping policy. However, this policy comes at the cost of high inventories, which could prove problematic in difficult economic times, by reducing available cash.

Despite its relatively young age, the company has already been paying increasing dividends for 30 years, which could make old hands like Chevron or IBM green with envy. Annual growth in distributions is also sustained, at 11.39%. THE distribution ratio remains at extremely low levels, at just 19.89%. THE long term average return on the other hand is low, at 1.13%, which tells us that the stock is a little overvalued at present. This is confirmed by a price/earnings ratio of 19.48.

Volatility in CHF, on the other hand, is quite reasonable, at 10.82%, which is low for a Nasdaq-listed company. The stock has a pronounced defensive and acyclical characterFor example, SIAL underperformed the market during the techno bubble, but outperformed the market as soon as it burst. The beta of 0.88 confirms SIAL's limited sensitivity to the market. Like many of the defensive stocks we follow, Sigma-Aldrich was able to capitalize on the "lost decade" of 2000-2010, which also explains its current overvaluation. Since 1990, the share price has risen by 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 business sector (raw materials in the chemical industry), but also to the very high proportion of exports, with over 3/4 of sales outside the United States. It is precisely this inverse sensitivity to the greenback that led us to follow SIAL. Visit $risk stands at -0.75, indicating that a fall in the dollar has a strong tendency to be accompanied by a rise in the value of the share in Swiss francs.

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.

 Sources: Wikipedia, Swissquote, Wikinvest, Yahoo Finance, dividendes.ch