Traditionally, Johnson Matthey is known for its focus on chemicals (especially platinum) and scientific industries and technologies. It has a diversified business model and has extensive interests in the field of renewable energy through its products and services.
In addition to chemicals and pharmaceutical materials, Johnson is also involved in the manufacture of automotive catalytic converters. These help car engines emit less carbon into the atmosphere. It is also committed to manufacturing parts for electric vehicles. Finally, it also has a vested interest in researching platinum-based anticancer drugs and fuel cells.
At the time of writing this article, Johnson Matthey’s stock is trading at 2,636 pence. At this time last year, the stock was trading at 2,349 pence, or a 12-month return of 12%. At the current level, if Johnson Matthey successfully transforms into mature FTSE 100 renewable energy stocks, I would think these stocks are cheap.
Performance and outlook
I often check past performance to measure a stock’s record, although I understand that past performance does not guarantee the future. In the past four years, revenue has increased year-on-year, which is positive.
Check out some recent updates, Johnson’s last Annual performance Announced in June. I think these are generally positive and are affected by Covid-19. Revenue increased by 8% to 15.7 billion pounds, but sales fell by 5%. Overall basic profit fell by 5% to 504 million pounds. These figures are compared with the transactions of the previous year. Announced a dividend of 70 pence per share, which is positive for me.
Johnson’s First quarter update The report released at the end of July pointed out that sales have returned to pre-pandemic levels, and operating profits are also higher than pre-pandemic levels. This is partly due to the volatile and above-average price of precious metals.
In my opinion, the future prospects may be positive. I mentioned earlier that Johnson entered the electric car parts market.It is building a customized factory In Poland, to promote this. In addition, it is studying green and blue (fossil fuel-based) hydrogen. Green hydrogen is an area of great concern to governments around the world.
The FTSE 100 Index is at risk
Johnson Matthey currently has some good fundamentals and many aspects. My point is that it can enhance its appeal through future projects. However, I must consider the risks involved.
First, the epidemic has caused fluctuations in the world economy and impacted commodity prices. This has benefited Johnson recently, but if prices fall or soar too high, it may also hinder it in the future. Finances and performance may be affected. In addition, the green energy race is saturated. The competition to take the lead in this market is fierce. If Johnson lags behind its competitors, it may lose market share and investor sentiment may weaken.
Overall, I do like the stocks of Johnson Matthey in my portfolio. I will consider increasing stocks and holding them for a long time. I will pay close attention to future developments to see if current projects and ambitious future goals can be achieved. If they do, I hope to see a good return.
Jabran Khan has no position in any of the shares mentioned. The views expressed by the companies mentioned in this article are those of the author and may therefore differ from the official recommendations we made in subscription services such as Share Advisor, Hidden Winners and Pro. At The Motley Fool, we believe that taking into account a variety of different insights, We are better investors.