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Friday, 01/12/2007 11:14:27 AM

Friday, January 12, 2007 11:14:27 AM

Post# of 585
Calumet Specialty Products ( CLMT )

I originally mentioned CLMT on the VMC board last April. It is up 38% since then but I feel there is plenty of room on the upside in 2007. At $41 per share this stock probably won’t have the TRGD type return, but it will be respectable and deserves some attention.

http://www.calumetspecialty.com

Calumet Specialty Products Partners, L.P. (Nasdaq: CLMT) ("Calumet") is a leading independent producer of high-quality, specialty hydrocarbon products in North America. Calumet processes crude oil into customized lubricating oils, solvents, and waxes used in consumer, industrial, and automotive products. Calumet also produces fuel products, including gasoline, diesel fuel and jet fuel. Calumet is based in Indianapolis, Indiana and has three plants located in northwest Louisiana.

More than half their business is derived from specialty lubricants (more than 250 different specialty products). The result is strong customer relationships and more ability to pass on fluctuating feedstock costs. With a focus on stable cash flow, they maintain a long term hedging program.

Since their IPO a year ago they underwent a large expansion at their Shreveport plant and additional expansions are in the works. Revenue growth is in excess of 20% per year which is double the industry average. EPS growth has been 189.77% vs. Industry average of 12%.

Some of the valuation notes from Ameritrade are:

CLMT is consistently one of the most efficient companies in the Oil & Gas - Integrated industry. With a Return on Assets, Revenues Per Employee, and Return on Equity of 19.91%, $4,761,306, and 40.67% respectively, they are among the most effective companies in the industry.
Return On Equity - 40.67% Actual - 29.84% Industry Average
Return On Assets - 19.91% Actual – 14.35% Industry Average
Return On Investment - 27.18% Actual – 19.99 Industry Average
Revenue Per Employee - $4,761,306 Actual - $2,878,541 Industry Average


Because CLMT is in the Oil & Gas - Integrated industry and has positive earnings, the PE and Price to Book ratios are the most appropriate valuation measures. The Price to Sales ratio is less instructive than the PE since the company has positive earnings. Therefore CLMT seems valued at a discount with a PE value of 5.903, one of the lowest in the Oil & Gas - Integrated industry,

PE ratio – 5.90 Actual – 9.76 Industry Average
Price/Sales – 0.40 actual – 1.14 Industry Average
Price/Book – 1.64 Actual – 2.71 Industry average


CLMT pays an annual dividend of $2.40 which, at its current stock price, produces a yield of 5.89%, above both the Oil & Gas - Integrated industry average of 3.59% and the S&P 500 Index yield of 2.10%. This is even more impressive in that few companies in the Oil & Gas - Integrated industry even pay a dividend.

CLMT's debt to total capital ratio, at 13.11%, is in-line with the Oil & Gas - Integrated industry's norm. With an Interest Coverage ratio of 2.87 and a Quick ratio of 1.92 the company should be able to comfortably repay its debt.

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