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Ashland Stock Is at an All-Time High—What’s Driving It?


May. 31 2018, Updated 9:01 a.m. ET

Ashland’s fiscal 2018 stock performance

So far, Ashland (ASH) has seen strong growth in 2018, a continuation of its success story in 2017. On a year-to-date basis as of May 25, the stock has risen 11.0%.

In comparison, its peers Celanese (CE), Eastman Chemical (EMN), and Westlake Chemical (WLK) have risen 6.9%, 14.7%, and 11.2%, respectively.

Ashland’s stock price gained momentum after it reported strong fiscal second-quarter earnings. Ashland reported fiscal second-quarter sales of $974 million, an increase of 21% over the previous year. ASH’s adjusted EPS stood at $1.06 compared to $0.70 in the previous fiscal year. ASH also initiated steps to cut $120 million in expenses related to its Corporate and Specialty Ingredients segment’s selling, general, and administrative expenses.

Ashland also made an upward revision to its adjusted EPS guidance to the range of $3.30–$3.50 compared to its earlier guidance of $2.90–$3.10. All these positives drove the stock to an all-time high of $79.2.

ASH has maintained that its free cash flow for fiscal 2018 will be $220 million. However, in the first six months of the year, its free cash flow remained negative.

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Moving averages and RSI

ASH’s strong gains resulted in it trading 24.5% higher than its 100-day moving average price of $63.46, indicating the prevailing bullishness in the stock. However, investors need to be cautious, as its 14-day RSI (relative strength index) is at 65 and inching toward a temporary overbought position. An RSI of 70 or higher indicates that a stock is overbought, while an RSI of 30 or lower indicates that a stock is oversold.

Investors can hold Ashland indirectly by investing in the iShares S&P Mid-Cap 400 Value ETF (MDYV), which has invested 0.6% of its portfolio in ASH as of May 25.


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