Emulsifying Agents And Types Of Emulsifiers

Emulsifying agents are soluble in fat and water to allow uniform dispersion of fat in water. Emulsifying agents are also called emulsifiers and present in the food like butter, mayonnaise and salad dressing. These have one hydrophilic and one lipophilic part. These agents surrounds the oil droplets in water and reduces the tension between the two liquids thus impart stability.

Classification of Emulsifiers
These can be classified on the basis of chemical structure and mechanism of action. Under chemical structure category are synthetic, natural, auxiliary agents and finely dispersed solids. In the category of mechanism of action comes the monomolecular, multimolecular and solid particle films.

Natural emulsifying agents are derived from plant and animal tissues and mostly in the form of hydrated lypophilic colloids. These emulsifiers make the protective sheath around the droplets, give droplets a charge so that they repel each other and swell to step-up the viscosity of the liquid.

Natural ones are derived from vegetables, animals, semi synthetic and synthetic agents. Although natural agents are inexpensive, safe and non toxic but these are slow in action. So large quantity of emulsifier is required for proper action. Also the natural emulsifiers need preservatives as these are subjected to microbial growth.

The animal derivatives are stronger than the plant ones. The best example of this is lecithin and cholesterol. Some people are allergic to these so must be consumed after knowing the derivatives.

Both semi-synthetic and synthetic emulsifying agents are strong and require no preservative as these are not prone to microbial growth.

Applications of Emulsifying Agents
Emulsifiers are used in many types of food for stability and to reduce tension. Like vinaigrette if prepared only with oil and vinegar leads to unstable emulsion. To stabilize mayonnaise egg yolk lecithin is used as emulsifiers. Both natural as well as synthetic emulsifiers are used in food industry. Egg, soybean, rapeseed oil and palm oil are the common natural agents. Dairy products like cheese and ice creams use the emulsifying agents to improve the texture. Also the crystallization of candies is improved by them. Jarred peanut-butter and sauces are given more life with the use of correct emulsifier.

It is extensively used in pharmaceutical industry to make medicines more good to taste and easy to take. In pharmaceutical oil and water emulsions are basically used. These are also used in other industries like agriculture, paints and inks. Fertilizers and pesticides are given more stability with these.

Harmful Effects
Although the one used in food are completely safe and more over natural ones are safer than synthetic. But in some cosmetics certain harmful emulsifiers like polyethylene glycol (PEG) compounds, have been found that are carcinogenic. Also the emulsifying agents in body care products causes mild or severe allergies of skin.

Value Stocks With Magic Peg Ratios

Value investors have long looked to the price-to-earnings ratio as a means to finding value stocks. However, Benjamin Graham, long considered to be the “father” of value investing, found that a low price-to-earnings ratio wasn’t enough to unearth the true undervalued companies.

Graham combined the low price-to-earnings ratios with the power of growth by using the PEG ratio. The PEG ratio is calculated by taking the price-to-earnings (P/E) ratio and dividing it by the growth rate.

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Normally, a stock with a PEG ratio under 1.0 is considered a “value”. But since the stock market decline of the past few months, quite a few stocks are now trading with PEG ratios far lower.

Screening for PEG
I created a screen for PEG ratios under 0.25, which would be an extremely low PEG ratio, on Zacks free Custom Screener. Just this one criteria gave me 86 stocks.

All 86 companies are not necessarily good value stocks. I eliminated companies that had a Zacks rank of 4 or 5 and then considered other fundamentals such as earnings surprises, return on equity and earnings history.

3 Stocks with Low PEG Ratios and Solid Value Fundamentals
The following 3 companies stood out because they had both stellar value fundamentals, including a low PEG ratio, and a solid business story.

Transocean Limited (RIG), the world’s largest offshore drilling contractor, has a PEG ratio of just 0.13. It is trading with a forward P/E of 4.7. Analysts expect 5-year earnings growth of 30%.

RIG is a Zacks #3 Rank (hold) stock. However, Zacks Equity Analyst Sheraz Mian has a “buy” rating on the stock, stating “Transocean continues to generate significant cash flows supported by a $38.7 billion backlog, which is of very high credit quality. The company is deploying its ample cash flows to strengthen its balance sheet, invest in its newbuild program, and return cash to shareholders through buybacks.”

Agrium Inc. (AGU), the Calgary-based fertilizer and agriculture services company, has a PEG ratio of 0.15. Its forward P/E is only 5.58. Analysts expect 5-year earnings growth of 40.1%.

AGU is also a Zacks #3 Rank (hold) stock. Zacks Equity Analyst Paul Raman has a “hold” on the stock due to the impact of the global credit crisis on farmers and volatility in fertilizer prices.

“Agrium is growing through acquisition and organic expansion. The acquisition of United Agri-Products (UAP) is driving revenues and profits supported by an expanded product line in the major business segment,” he said.

Shengdatech, Inc. (SDTH), a Chinese-based chemical company specializing in manufacturing nano precipitated calcium carbonate (“NPCC”), has a PEG ratio of 0.25. The company has a forward P/E of 7.72. Analysts project 5-year earnings growth of 20.67%.

SDTH is a Zacks #3 Rank (hold) stock. On Apr 2, the company announced record fourth quarter results and also saw revenue for 2008 exceed the company’s prior guidance. It has surprised on estimates 4-quarters in a row by an average of 16.94%.

Low PEG Ratios Are the Beginning Not the End
Seeking a low PEG ratio is a good way to begin a search for value stocks but it’s not the only indicator. As outlined here, start with the PEG ratio and also screen for other fundamentals. Combined with other value indicators, the PEG ratio can be a powerful tool for value investors.