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Top Picks 2018: Ecolab Could be a Late-Cycle Name to Watch

Ecolab has an impressive history of dividend payments and growth.

Ecolab (ECL) provides water, hygiene and energy technologies for customers in the chemical, mining, power generation and petroleum industries, and we believe it is positioned well as the business cycle matures, explains John Eade, analyst with Argus Research.

Ecolab acquired Nalco Holdings, a provider of water, energy, and air improvement solutions in 2011, and Champion Technologies, an upstream oil and gas products and services company, in 2013. In February 2017, it completed the purchase of Anios, a producer of antimicrobial products for the healthcare, food, and hospitality industries.

Earnings have been suppressed by weakness in energy, but higher oil prices on OPEC production trimming and demand recovery should lead to better-operating results as the business cycle matures.

Ecolab has paid cash dividends for 79 straight years and is also historically a strong late-cycle performer.

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In our view, the company has prospects for above-average revenue and earnings growth over the long term, and the stock appears attractively valued at current levels. Ecolab has an impressive history of dividend payments and growth. The shares are a suitable core holding in a diversified portfolio.

John Eade is a senior analyst with Argus Research.

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