For his second Executive Decision segment of Monday's "Mad Money" program, Jim Cramer spoke with Benjamin Gliklich, president and CEO of Element Solutions (ESI) , ae specialty chemicals provider.
Gliklich said while Element Solutions has a diverse business, 90% of its sales stem from just two areas. About 60% of the business is in electronics and 30% is in industrial surface solutions.
One of ESI's largest end markets is automotive, where its solutions help decorate and protect auto components. Gliklich said the solutions are referred to as "wet chemistry," as the coatings are typically applied in vats. However, the value of those coatings is in the technology and services that ESI provides to make those coatings possible.
As for the company's electronics business, Gliklich said every semiconductor gets mounted onto a printed circuit board, and Element Solutions makes the coatings that allow those boards to function.
Cramer said Element Solutions is a great unknown story that's also inexpensive.
Let's see what the charts and indicators look like.
In this daily bar chart of ESI, below, we can see that prices rallied to a June zenith and then turned sideways in a five-month consolidation. ESI is trading just above the 50-day moving average line and above the 200-day line after a successful test in September. The On-Balance-Volume (OBV) line shows a slight rise for the past 12 months, telling us that buyers of ESI have been more aggressive. The Moving Average Convergence Divergence (MACD) oscillator is bullish.
In this weekly Japanese candlestick chart of ESI, below, we see a positive-looking picture. Prices are trading higher above the 40-week moving average line. The OBV line shows gains for the past two years. The MACD oscillator is above the zero line and narrowing toward a new buy signal.
In this daily Point and Figure chart of ESI, below, we used close-only price data. Here the software projects the $44 area as a potential price target.
Bottom line strategy: Traders could go long ESI at current levels and add on strength above $25. Risk to $20.50. The $44 area is our price target for now.