OM Group: Patient Investors Can Go OMG!

The recent rout of commodity stocks has uncovered some real gems for investors to consider, such as Cleveland-based OM Group, Inc. (OMG), which Ockham Research rates a Strong Buy at present. OM Group produces hundreds of metal-based specialty chemicals and powders from such elements as copper, nickel and cobalt. Their products are used in the manufacture of auto catalysts, stainless steel, rubber, jewelry, rechargeable batteries and alloy metal plating applications. OMG stock has pulled back dramatically from its high of $62.73 in June of last year to $30.55 in Tuesday’s trading. Much of the share price decline can be attributed to the sell-off in commodity prices and fears that a slowing economy will dampen manufacturing demand around the world.

Up until recently, OMG had been able to pass rising commodity prices on to its customers and was thus relatively unaffected by the inflationary spike in commodity prices. However, the fear is growing that a faltering global economy will pinch the company’s ability to mitigate raw material inflation and that the company’s earnings in the coming quarters will take a big hit. This concern touched off a steep decline in the shares which has made them a Strong Buy to us.