Aceto: A Perfect Niche

03/28/2003 12:00 am EST


Tobin Smith

Founder and Chief Research Analyst, Transformity Research LLC

“Our new aggressive growth recommendation is Aceto Corp. (ACET NASDAQ). One of the main tenets of riding ChangeWaves is to look at those who supply the companies directly serving the fast-growing new demand that fuels a money making ChangeWave. Aceto Corp. was brought to my attention a few months ago as an up-and-coming supplier of active pharmaceutical ingredients to the generic drug industry. With their latest results, I'd say they have made the transition from small player to a major player in the Generic Drug ChangeWave.


“Multiple quarters of sales growth and three straight quarters of earnings growth say they have arrived. They are worldwide, and service the fast-growing generic drug labs in India in addition to China. Recent company results show net sales growing by 29% with operating profits rising 168% in a comparison of the first six months of fiscal 2003 with the year-ago period. ACET topped quarterly earnings forecasts last month and officials attribute the success to the growth from supplying ingredients for new generics and increased market share.


“Aceto is the perfect small-cap niche player serving the Generic Drug ChangeWave. And their strategic decision to transform their company to serve generic drug manufacturers makes this company a fantastic addition to those stocks. We recommend buying Aceto under $12.50 with a target of $18-$20 by year-end.”


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