If you’re looking for the security of large-cap mining companies, but struggling to find value in an overheating market then don’t look past three businesses that offer some literally explosive potential. Blasting with explosives is an essential step in extracting the minerals required to meet global demand for power, infrastructure and consumer goods, and that’s why these businesses have a solid outlook.
Incitec Pivot Limited (ASX: IPL) is at the top of the fertiliser and explosives distribution game, with excellent potential to grow long into the future. The types of fertiliser products it sells worldwide are the bedrock of global food production and demand is unlikely to slow up. In fact as it increases so should prices to grow IPL’s bottom line on a consistent basis.
Selling for $2.94 it trades on 14.7 times analysts’ projections for 2014’s earnings, with a partly franked dividend yield around 3.4%.
Worley Parsons Limited (ASX: WOR) is a professional services business supporting oil, gas, and infrastructure projects all around the world. The slowdown in resources spending in Australia recently has seen the share price come off, but IPL might be 2015’s comeback kid if it can leverage off growing capital expenditures on the less conventional fields of LNG and renewable energy.
Selling for $18.48 it trades on 17.3 times projected earnings with a dividend yield of 4.07% based on analysts’ estimates for dividends per share of 75.1 cents in financial-year 2014.
The final member of this explosive trio is Orica Ltd (ASX: ORI), which is also involved in the explosives and fertiliser supply and manufacturing business. It has operations in more than 50 countries and is now expanding into some of the last frontiers of Africa and Russia. Like the others this looks a growth business with scope to leverage off growing economies of scale and the benefit of cost-saving new technologies.
Selling for $20.26 Orica looks the pick of the bunch, trading on 12.5 times projected earnings with a dividend yield around 4.7%. Dividends are also forecast to grow steadily out to 2016.
Given the essential nature of these businesses to global growth it’s no surprise all three are among the ASX’s 50 most valuable. If you’re looking to grow your way to the top of the food chain, just enter your email below to check out these three high-risk/high-reward resources tips..
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Motley Fool contributor Tom Richardson has no financial interest in any company mentioned. You can find him on Twitter @tommyr345
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