Innophos Holdings Soaring 8% On Barron's Mention

Innophos Holdings, Inc. IPHS shares are soaring more than 8% this morning after the name was positively mentioned in Barron's over the weekend. Barron's interviewed Meryl Witmer on the stock, and she said, "The company could earn about $4.70 a share of free cash flow in 2011 and about $5 in 2012. Reported earnings are about $1 a share lower. Innophos has a strong balance sheet with little net debt. It is worth about 12 times free cash flow. Our target price is $65." Witmer praised the company for the operations improvements it is making. "Specialty ingredients usually account for less than 1% of the overall cost of a product. They deliver technical effects that are hard to replicate with substitutes, and it can take months to qualify a specialty phosphate in a product so it generally isn't worth switching suppliers. These attributes allow Innophos to pass through cost inflation in its key input, phosphate rock. It recently restructured its rock sourcing to have multiple suppliers and shorter lag times between price fluctuations. The company buys phosphate rock in Mexico and converts it to an intermediate product. It also buys intermediate product in the U.S. and processes it further into specialty ingredients. Innophos is working to shift some sales in Mexico to higher-value-added products," Witmer said. Shares are trading at 10.9 times next year's earnings, and also sport a 2.4% dividend yield. At last check, shares were up $3.50 to $45.99, a gain of 8.24% on 150,000 shares. The average daily volume in the name is just 130,000 shares, so volume is well above the average daily volume already. Innophos Holdings, Inc., together with its subsidiaries, produces and sells specialty phosphates primarily in North America. The company offers specialty salts and specialty acids, such as sodium aluminum phosphate, sodium acid pyrophosphate, and others.