Why Cytec Industries Shares Popped

Before you go, we thought you'd like these...
Before you go close icon

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of Cytec Industries (NYS: CYT) climbed 10% on Thursday after the specialty chemicals maker offered to buy British aerospace parts supplier Umeco for about $439 million.

So what: Cytec is making the move to expand its advanced composites business, and judging from the double-digit stock price jump, Wall Street seems very pleased with the strategy and the purchase price. "It greatly improves our composite presence in the industrial sector, where we see tremendous potential for significant value creation," Cytec CEO Shane Fleming said. "The acquisition also enhances our near-term composite capacity while we complete capital investments over the next few years."


Now what: Cytec expects the deal to close in the third quarter and immediately be accretive to earnings. In the meantime, management also expects first-quarter EPS to come in well above the average analyst estimate. However, with the stock now up 100% from its October lows and hitting a new 52-week high, I'd wait for a significant pullback before jumping in.

Interested in more info onCytec?Add it to your watchlist.

At the time this article was published Fool contributor Brian Pacampara owns no position in any of the companies mentioned. Try any of our Foolish newsletter services free for 30 days.We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Fool's disclosure policy always gets a perfect score.

Copyright © 1995 - 2012 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.

Read Full Story

Want more news like this?

Sign up for Finance Report by AOL and get everything from business news to personal finance tips delivered directly to your inbox daily!

Subscribe to our other newsletters

Emails may offer personalized content or ads. Learn more. You may unsubscribe any time.

From Our Partners