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The specialty chemical manufacturers have been at the forefront of the global recovery. OM Group Inc. (OMG - Snapshot Report) recently surprised on the Zacks Consensus Estimate by 59% as demand remained strong across its global end markets. This Zacks #1 Rank (strong buy) has attractive valuations, with a forward P/E of 14.

OM Group manufactures specialty chemicals and advanced materials for industrial processes. Headquartered in Cleveland, with manufacturing facilities worldwide, its customers are in various industries including rechargeable batteries, electronic devices, cutting tools, industrial coatings, defense, aerospace and medical devices.

OM Group has 3 business units: Battery Technologies, Advanced Materials and Specialty Chemicals. It specializes in cobalt-based specialty chemicals and is a major supplier of nickel-based specialty chemicals.

OM Group Surprised For the 7th Consecutive Quarter in Q1

On May 5, OM Group reported its first quarter results and continued to see the strong sales and earnings growth that it saw in 2010.

The company surprised on the Zacks Consensus by 38 cents. Earnings per share were $1.02 compared to the consensus of 64 cents. It made just 74 cents in the year ago period.

Sales jumped 9% to $331.3 million, due to growth across all 3 segments including higher cobalt volume in the Advanced Materials segments and volume growth for semiconductor and printed circuit board end markets in the Specialty Chemicals segment.

Sales rose 6% to $180.1 million in its largest segment, Advanced Materials. Sales also jumped 5% in Specialty Chemicals to $120.6 million.

What Slowdown?

As of May 5, the company was not seeing a slowdown in business. On the contrary. It saw continued global demand for its portable power and electronic chemicals due to demand for electronics in the second quarter.

The company also expects its powder metallurgy and coatings end markets to benefit from strength in industrial production and the eventual initial recovery in construction.

Areas of caution for the year include the pace of the industrial recovery in Japan after the earthquake and tsunami and fluctuations in foreign currency exchange rates.

2011 and 2012 Zacks Consensus Estimates Rise

The full year estimates for both 2011 and 2012 have been on the move.

In just the last week, the 2011 Zacks Consensus jumped by 13 cents to $2.86 per share as one estimate moved higher in that time.

Similarly the 2012 Zacks Consensus rose to $3.14 from $2.97 in the same time period, which is earnings growth of 9.9% over 2011.

Valuations Still Attractive

Shares have been on a roller coaster since the 2009 lows. Currently, shares are holding near the 2008 pre-recession high.

Still, shares have attractive valuations as earnings have risen.

In addition to a P/E under 15, the company has a price-to-book of just 0.9 which is well under the value cutoff of 3.0 and also under the S&P 500 average of 3.6.

OM Group is a way for investors to play the global recovery while still getting value.

Tracey Ryniec is the Value Stock Strategist for Zacks.com. She is also the Editor of the Turnaround Trader and Insider Trader services. You can follow her at twitter.com/traceyryniec.

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