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Ecolab (ECL) Hits 52-Week High on New Products, Buyouts

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Shares of Ecolab Inc. ECL attained a new 52-week high of $121.89 on Oct 14, eventually closing a tad bit lower at $121.34. This represents a strong year-to-date return of about 16.1%. The S&P 500 has returned a -3.1% during the same period.

St. Paul, MN-based Ecolab is a leading provider of cleaning, sanitizing, food safety and infection prevention products and services. This Zacks Rank #3 (Hold) stock reported earnings of $1.08 in the second quarter 2015, which were in line with the Zacks Consensus Estimate.

Key Growth Catalysts

Ecolab's growing focus on water management and conservation, innovative product portfolio and strategic acquisitions are key growth catalysts.

In August, Ecolab launched an advanced version of its water management tool - The Water Risk Monetizer - which helps water-dependent businesses to gauge the impact of water scarcity on revenues.

In April this year, Ecolab launched the Clean and Conserve Education Program in partnership with the Project WET Foundation. The program is designed to educate students about the importance of water conservation and hygiene.

In order to strengthen its position in the water management market, Ecolab acquired a controlling interest in Jianghai Environmental Protection Co. Ltd in China. Jianghai, with annual sales of $90 million, provides water treatment technologies and services to several industries in China, including customers in the power and chemical sectors.

The buyout expanded Ecolab's services and enhanced its long-term growth opportunities in the increasingly water-stressed China market. In particular, the emerging markets of China and South Africa hold promising prospects for Ecolab owing to higher demand for water in industrial manufacturing and related processes.

Ecolab also acquired the U.S. operations of Swisher Hygiene in August. Swisher Hygiene provides hygiene and sanitizing solutions to approximately 30K businesses. The company's U.S. operations generated approximately $176 million in annual sales. The takeover will expand Ecolab's institutional customer base and service coverage, particularly in the independent restaurant chains.

However, even as Ecolab expands its presence in the international sphere, we feel that macroeconomic problems and fluctuations in currency exchange rates will impact sales considerably. For 2015, the company expects unfavorable foreign currency to hurt sales by 6% and EPS by 29 cents.

Stocks to Consider

One may consider other favorably ranked stocks in the same space like Israel Chemicals Ltd. ICL , Chemtura Corporation CHMT and Daqo New Energy Corp. DQ . While Israel Chemicals sports a Zacks Rank #1 (Strong Buy), Chemtura and Daqo carry a Zacks Rank #2 (Buy).

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ECOLAB INC (ECL): Free Stock Analysis Report

CHEMTURA CORP (CHMT): Free Stock Analysis Report

ISRAEL CHEM LTD (ICL): Free Stock Analysis Report

DAQO NEW ENERGY (DQ): Free Stock Analysis Report

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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