I continue to be amazed at the number of publicly traded companies that have quite mundane-seeming businesses and yet are able to achieve market-boosting returns.
One of the many examples of this phenomenon is Oil-Dri of America (NYSE: ODC). Oil-Dri is a leading, vertically integrated manufacturer and marketer of sorbent minerals (clay) and related products.
While no part of this company description jumps off the page and screams about “market-beating potential,” Oil-Dri’s stock has tripled in the last two years. Since 2000, it has almost tripled the economy’s total return S&P500 index, becoming a 16-bagger.
As promising as these past returns have been, I believe Oil-Dri’s future could prove even brighter. Here’s what the little-known dividend growth stock does and why it appears positioned to continue beating the market for decades to come.
Oil-Dri has been on Forbes’ list of ‘America’s Most Successful Small Companies’ for two years in a row and appears to be finally gaining the market’s well-deserved attention. The company has been mining clay since 1963 and currently has facilities in six US states, with reserves expected to last at least another 40 years.
Powered by these clay mine locations, Oil-Dri serves the following markets:
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Pet care (55% of sales): Oil-Dri has patents on lightweight scoopable cat litter that it sells under the brands Cat’s Pride, Jonny Cat and KatKit. However, after acquiring Ultra Pet in 2024, the company entered the crystal litter niche, whose superior performance is leading to a rapid rise in popularity among cat owners.
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Fluids purification (21% of sales): Oil-Dri’s clay products allow customers to process vegetable oils, edible oils, jet fuel and biodiesel. They also have adsorbents that remove metals for the renewal diesel market.
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Industrial and sporty (10% of sales): If you’ve ever seen pebbles on the floor of a mechanic’s shop or your grandpa’s garage, chances are they’re Oil-Dri’s granular clay absorbents, which prevent spills or leaks . Meanwhile, the company’s clay helps drain sports fields and also builds pitching mounds and batting boxes on baseball diamonds.
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Agriculture and horticulture (8% of sales): Agsorb and Verge granules from Oil-Dri help nourish and protect plants and crops.
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Animal health (6% of sales): The company’s Amlan International unit produces natural feed additives that keep animals healthy and protect them from toxins.
Although Oil-Dri competes with many competitors in these markets, its vertically integrated operations give the company an advantage. In addition, most of the company’s products are recurring purchases and “staples” for the customers it serves, making sales relatively stable and robust for an industrial company.
