Ashlands stock is less than 1/2 of its all time low. Its nearly 10 times down from its 52 week high. Its priced for bankruptcy. The reason for the slaughter is the debt related to their purchase of hercules chemical last fall. Like every company with significant levereage right now, Ashlands stock is slaughtered.

But their outlook isn't bad. The chemical industry has, at least in parts, and of course this is my view and not material fact, seen the worst in Q4 2008/Q1 2009. This is because inventories in Q4 2008 have dropped alot everywhere as people work to reduce their costs. Inventories cannot drop more in many areas, or as much again in other areas, and so business as usual will go on, followed by (probably not soon) an eventually re-raising of inventory levels. This should result in a sort of " negative hiccup" in alot of businesses, including the chem biz, in Q4 08 and Q1 09, followed by stabilization or a bump back up even if overall useage doesn't rise.

Ashland is, like any company with debt in this recession, in a situation where its not inconceivable that they violate covenants relating to loans for their debts. However, in Ashlands case they are not likely to wind up in violation. They made enough ebitda to stay in compliance in Q1 (which is typically the slowest quarter of their year. Q1 for ashland is Q4 of calendar 2008). They have stated that Q2 (calendar Q1 2009) is going better than the last quarter. They are comfortably ahead of the levels demanded by the covenants at this time, and working to reduce costs and maximize cash flow. INCLUDING REDUCTION OF EXECUTIVE PAY, PERKS, ETC. That part is important to me as an investor.

Ashland is an overall very good business that Wall Street has liked for 25 years. At this time of extraordinary banking stress and fear and panic surrounding banks and the availability of credit they made an aquisition. As a result investors have a chance to buy a dollar for about 10 cents.

But the company has quite probably gained from this aquisition, and quite probably remains in a position to comply with its loan covenants. Additionally, no significant debt is due until 2014, although they plan to pay it down faster than required.

They have cut their dividend in half, and despite this they are paying 4.7%. Presuming the dividend one day goes higher than it was (likely excepting a case of bankruptcy, which I do not feel is likely) you are looking at potentially 10% of current investment paid as dividends down the road.

This stock may go lower, and I would not be surprised to see it dip into the $5 range, but it will be back and its highest price is yet to be seen.

In my humble and modest opionin, if you buy and hold hold hold, you are looking at a 10 bagger with great dividend outlay. Short term, Zacks rank is 5, and it could well drop.

I am in with real money in at an average of $8.xx. That'll become $7.xx on monday when I add to the position (thats monday Feb 23, 2009) and $6.xx if it goes lower or stays this low. God bless dollar cost averaging and here's to Ashland having a good future. Buy and hold.