Ashland impacted the price hike
On August 14, 2017, Ashland (ASH) announced that it would hike maleic anhydride prices. The price increase will be $0.02 per pound starting on September 1, 2017, or as the contract allows. The price hikes will impact the North American region. The higher prices are mainly due to higher raw material prices.
Maleic anhydride is used to manufacture polyester resins, copolymers, lubricating oil additives, and much more. The price hike might have a positive impact on Ashland’s revenue in fiscal 4Q17 if the volumes remain the same or increase. Ashland reported fiscal 3Q17 revenue at $870 million—compared to $790 million on a year-over-year basis.
Ashland’s stock performance
Ashland rose 0.30% marginally and closed at $60.98 for the week ending August 18, 2017. Although Ashland rose, the stock still traded 4.40% below the 100-day moving average price of $63.78, which indicates the downward trend in the stock. The RSI (relative strength index) of 29 indicates that the stock has temporarily moved into an “oversold” situation. An RSI score of 30 and below indicates that the stock is oversold, while an RSI above 70 indicates that the stock is overbought. However, on a year-to-date basis, the stock has returned 14.0%. Analysts expect the stock price to rise to $72.75 over the next 12 months, which implies a potential return of 19.30% over the closing price as of August 18.
Investors looking to hold Ashland indirectly can invest in the PowerShares DWA Basic Materials Momentum Portfolio (PYZ), which has invested 3.20% of its portfolio in Ashland. The fund’s other holdings include Chemours (CC), FMC (FMC), and Albemarle (ALB) with weights of 4.60%, 4.50%, and 3.50%, respectively, as of August 18, 2017.