Accumulate - Price 49.82 on June 2
by the Buckingham Group

Sigma-Aldrich is a leading supplier of biological and organic chemicals to [global] research labs, manufacturing about half of its 100,000 chemicals. Growth drivers include [research-and-development] innovations, favorable price increases, marketing initiatives, and acquisitions. Risks include changes in research funding, uncertainties in government health-care reform, and fluctuations in interest rates and [foreign-currency exchange] rates. The stock is up…almost 60% from March low. We are raising our target from 52 to 58, which reflects 18.7 times forward EPS. Unlike some stocks which have recovered to the high end of their valuation range, the high end of SIAL's forward P/E range is near 25 times, and the stock is still about 20% below its 2008 high.…Most chemical companies with f/x exposure are also [subject] to the offsetting effect of oil prices. Oil prices have a relatively[small] impact on SIAL's near-50% gross margins. Research-and-drug consumables are among the more stable, predictable growth areas in chemicals. SIAL doesn't sell big-ticket research equipment.…Individual testing and the production of custom medicines both play to SIAL's products, which are used in the analysis of genes, and in small-volume (i.e., custom) production (SIAL produces 46,000 products). Market cap: $6.1 billion.

n St. Louis, Sigma-Aldrich, a leader in the $10 billion worldwide market for research chemicals, raised its quarterly dividend to 14.5 cents a share from 13 cents. Holders of record March 2 will get the new payout March 16; the ex-date is Feb. 26. Dividends have been paid since 1970 and enriched for 28 years in a row. Yield: 1.49%. There are 7.7 million shares remaining in the company's current buyback program, but it said that "the timing and number of shares purchased, if any, depend upon market conditions." Sigma-Aldrich forecast a 2009 profit equal to or slightly greater than the $2.65 a share it earned in 2008 on record sales of $2.2 billion..

PE of 20, a PEG of 2.01, and it pays a yield of 1%.

Robert Baird downgraded two life sciences stocks -- SIAL and TECH -- from Outperform to Neutral. Valuation call, as stable end markets and overseas growth should lead the group to outperform the broader market over the coming months.

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good prospects

To monitor

Real Money turned me in to it.

Great market niche in products essential for research

near historic lows