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.

Malgré son âge relativement jeune, la société verse des growing dividends depuis déjà 30 ans, ce qui pourrait faire pâlir d'envie des vieux briscards comme Chevron ou IBM. La croissance annuelle des distributions est par ailleurs soutenue, avec 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.

There volatility en CHF par contre est tout à fait raisonnable, avec 10.82%, ce qui est peu pour une entreprise cotée au Nasdaq. The stock has a pronounced defensive and acyclical character, sous-performant par exemple le marché durant la bulle techno, mais survolant les débats dès son éclatement. Le beta de 0.88 confirme cette sensibilité limitée de SIAL par rapport au marché. Comme beaucoup de titres défensifs que nous suivons, Sigma-Aldrich a su tirer parti de la "décennie perdue" 2000-2010, ce qui explique aussi sa survalorisation actuelle. Notons que depuis 1990 le cours de l'action a pris 900%, battant le marché à plates coutures.

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