Cleaning Company Catalysts

In Monday’s Goldman Guide number 10 on our list of ways to invest for 4Q 2013 was to put money in a stock that had a catalytic event or inflection point.  Quarterly financial reporting season has begun and for some stocks these numbers represent a turnaround or the continuation of some awesome momentum.

This morning Zep, Inc. (NYSE – ZEP - $15.70) released fiscal 4Q13 and annual 2013 financial results. 4Q13 revenue was just over $182 million versus the $179 estimate, and earnings were $0.28 per share versus $0.24 estimate.  Net sales for the entire fiscal year of 2013 were $689.6 million versus $686.5 estimate.  These numbers along with a positive outlook for the Company’s 2014 fiscal year should prove to be the catalyst to drive the share price higher.

Zep is a producer and marketer of cleaning and maintenance chemicals, and related products and services for commercial, industrial, institutional, and consumer applications in North America and Europe. Its product portfolio includes anti-bacterial and industrial hand care products, cleaners, degreasers, deodorizers, disinfectants, floor finishes, sanitizers, pest- and weed-control products, air-care products and delivery systems, and various automotive maintenance chemicals for the automotive, fleet maintenance, industrial/maintenance and repair supply, institutional supply, and motorcycle markets. The Company markets its products and services under various brands, such as Zep, Selig, Armor-All, Niagara, Washtronics, Enforcer, Forward, Rexodan, Zep Commercial, Mykal, De.Solv.It, Original Bike Spirits, Country Vet, Zep Professional, Microbemax, Misty, TimeMist, i-Chem, TimeWick, and Next Dimension brand names, as well as private label and OEM private brand names.

Additionally, our three-fold checklist given the current market conditions makes ZEP a very attractive prospect.  Very bullish signals for long, intermediate, and short term DMA make the stock look great from a technical analysis perspective.  Plus, FY2014 earnings are forecast to increase 16% putting next year’s FY P/E just over 16.  Check number two.  Finally, ZEP is on a great momentum run, up nearly 19% over the last three months trading at nearly 100,000 shares per session.

Separately, last week Zep announced it was increasing its quarterly dividend by 25% to $0.05 per share with an ex-dividend date of October 17^th.   This is yet another positive for owning the stock.  Look for a nice bump over the next several weeks.

Have a great day!

Disclosure: Goldman Small Cap Research analysts are neither long nor short these shares but may elect to purchase the stock within the next 48 hours.

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