Over the last year, global chemicals and construction product manufacturer Nuplex Industries Ltd (ASX: NPX) has seen its share price rise by as much as 20% before falling over the last three months so that it's now up only 1% since August 2013. This doesn't compare favourably to the ASX's performance, with the index being up 11% over the same time period. However, here's why Nuplex could prove to be a winning investment moving forward.
Super value
While many investors are understandably becoming rather nervous when it comes to share prices and their valuations, Nuplex seems to offer great value for money at its present price. For instance, shares in the chemicals company currently trade on a P/E of just 10.6, which is significantly below the ASX's P/E of 16.3. It's also less than the sector P/E of 13.1, which highlights Nuplex's relative value, as well as its absolute value at current price levels.
A top notch yield
As well as being cheap, shares in Nuplex also come with a great yield. Sure, it's unfranked, but a 7.4% yield still works out at a very respectable 4.1% on a tax adjusted basis. That's much higher than the current level of interest rates and, perhaps more importantly for income-seeking investors, Nuplex is forecast to increase dividends per share at a brisk pace over the next couple of years. Indeed, the company is expected to increase dividends per share by 8.6% in the next two years alone, which should maintain the company's present appeal as a top income play.
Growth potential
As well as being cheap and having a high yield, Nuplex could also have a bright future ahead of it. This is evidenced by growth forecasts over the next two years which show that the company's bottom line is set to rise by 15.2%, which is highly respectable and means that Nuplex could appeal to growth investors, as well as income and value investors.
Such high forecast growth rates mean that Nuplex trades on a PEG ratio of just 0.7, which shows just how potent the combination between growth and value (as well as income) could prove to be. As such, Nuplex could prove to be a great buy at current price levels.
