Are Carbacid shares a good investment?

Are Carbacid shares a good investment?

Carbacid is among investors’ favourite stocks right now. Carbacid shares jumped 9.72% Monday to close at Ksh11.85. The stock rose 9.87% last Friday. Investor interest in Carbacid stock has increased after the company announced plans to acquire its rival BOC Kenya.

Carbacid and BOC Kenya are both gas companies, serving industrial and medical industries. While Carbacid’s primary product is carbon dioxide gas, BOC Kenya is big in oxygen gas supply business.


Why Carbacid wants to acquire BOC Kenya

Carbacid has made an offer to acquire BOC Kenya for Ksh1.2 billion, valuing the rival at Ksh63.50 a share. Carbacid believes acquiring BOC Kenya will expand its market and allow it make more money. Shareholders of both companies will need to approve the deal before the transaction can close. BOC Holding, the parent of BOC Kenya, supports the deal.

In addition to securing shareholder support, the companies will require the blessings of the antitrust and capital markets regulators for the deal to close. BOC Kenya shares will delist from the Nairobi Securities Exchange if the deal goes through.


Are Carbacid shares good to buy on the BOC Kenya bid?

The surging Carbacid shares signals that many investors believe the company will be more successful in its gas business if it takes hold of BOC Kenya. The Covid-19 pandemic has boosted the demand for oxygen and carbon dioxide gases.

For example, hospitals are purchasing more oxygen to help Covid-19 patients with breathing problems. Carbon dioxide is used to make dry ice, which is used to preserve temperature-sensitive items such as drugs.

The Covid-19 vaccines that Pfizer and Moderna have developed require extremely cold storage to remain effective. Consequently, demand for dry ice and its raw material carbon dioxide are expected to spike when Covid-19 vaccines distribution begins. That should boost sales at Carbacid and generate more profits.

Carbacid has a history of sharing its success with investors. After its profit shot up 22% to Ksh324 million in the financial year ended July 2020, Carbacid declared a dividend of Ksh0.70 per share. The company will distribute the dividend in January 2021. Many investors hope that Carbacid could pay better dividends if it succeeds to swallow BOC Kenya.


How to buy Carbacid shares

Carbacid shares trade on the Nairobi Securities Exchange under “CARB” ticker symbol. To be able to buy Carbacid shares, you will need to open a CDS account. You can open the account through a stockbroker or bank that offers stock trading service.

Once you set up the CDS account, you can proceed to purchase Carbacid shares. You will decide the amount of shares you want to buy and place your order. Bear in mind that the minimum number of Carbacid shares you can purchase at any moment is 100 units. Remember to provide the broker with the money to purchase the shares for you.

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