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Why this broker thinks Incitec Pivot Ltd (ASX:IPL) could see your portfolio returns explode

mine blast explosives
Credit: iStock

Shares in explosives manufacturer and distributor Incitec Pivot Ltd (ASX: IPL) are on the slide today, down 1.7% to $3.47 at the time of writing – signalling buy time according to Ord Minnett.

Incitec Pivot is on Ord Minnett’s buy recommendation list at present after the company demonstrated solid performance in its half-year reports earlier this month as strong demand in the sector is expected to drive growth.

The broker thinks earnings at the US-based Waggaman facility is likely to be behind the push upwards, coupled with a recently-announced share buyback out of the company.

Incitec owns and operates manufacturing plants for explosive devices, industrial chemicals and fertilisers with plants in Australia, Canada, Turkey, Mexico, Chile and Indonesia.

It’s hard to find a direct peer for Incitec, but there are some crossovers in offerings out of the likes of industrial and specialty chemical producer and commercial explosives manufacturer Orica Ltd (ASX: ORI) whose shares are also down 0.7% at the time of writing to $17.94.

Orica’s diversified offerings mean it also comes up against mining sector peers like BHP Billiton Limited (ASX: BHP) and Rio Tinto Limited (ASX: RIO) both of which are also on the decline today with BHP down 0.6% to $33.72 and Rio down slightly to $84.91.

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Motley Fool contributor Carin Pickworth has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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