Arch Chemicals: Wait for Value or Ride Growth?

In past Small-Cap Spotlight articles, we examined some of the high-growth names such as Under Armour(UA Quote), Crocs(CROX Quote), Buffalo Wild Wings(BWLD Quote) and Jones Soda(JSDA Quote). While those stocks are well known by the investment public, they also carried huge short positions in excess of 27% -- so the disparity in feedback was quite entertaining.

However, with volatility increasing and the Russell 2000 -- the benchmark index for small-caps -- down about 10% over the past three weeks, we are looking at under-the-radar names that have less correlation to the overall indices. One stock that fits the profile is specialty chemical manufacturer Arch Chemicals(ARJ Quote), which was recently trading around $38.50.

Curzio: Still Plenty of Potential

Arch Chemicals is the largest provider of biocides (chemicals used to destroy living organisms) in the world, with about a 20% market share. Its treatment products can be found in swimming pools and antidandruff shampoos. Its advanced preservatives also can be used for wood protection.

I stumbled across Arch Chemicals a little over a year ago, when shares were trading at $29. The company was diversified, paid a solid dividend of more than 2%, had an experienced management team and was a key player in almost every market it targeted.

Today, all these catalysts still exist, but the company's latest strategy -- including repositioning its brands and selling off noncore underperforming assets -- could lead to further upside in the stock.

To watch Frank Curzio and Larsen Kusick's video take of this column, click here.