Is the Johnson Matthey share price undervalued?
Clean air advocate Johnson Matthey (LSE:JMAT) has made some exciting announcements in recent weeks. The FTSE 100 company is moving into battery and hydrogen tech. It also has several other interesting revenue streams. I last wrote about the stock in April when I was tempted to buy JMAT shares, but I havent taken the plunge yet. Trading sideways  The Johnson Matthey share price has risen around 2% since then. Last year the JMAT share price fell 20%, but it has risen 89% since the market crash in March 2020. Its now trading above its pre-pandemic price. 5G is here  and shares of this sleeping giant could be a great way for you to potentially profit! According to one leading industry firm, the 5G boom could create a global industry worth US$12.3 TRILLION out of thin air And if you click here well show you something that could be key to unlocking 5Gs full potential... I think the fact the share price has already recovered could be putting investors off jumping in at this stage. However, I see growth opportunities ahead in several areas of the business. JMAT is the worlds largest secondary refiner of platinum group metals (PGM), it also creates enamels for strengthening car parts, emission control technologies, battery materials and pharmaceutical ingredients. Clean air solutions  The company is mainly known for producing catalytic converters for exhaust systems in the traditional auto industry. Were well aware climate change mandates are sending this industry into decline, but that doesnt spell the end for Johnson Mattheys business. Catalytic converters essentially make the air cleaner, so theyre still in high demand, certainly in the near term. And the company is making an effort to move into the electric vehicle market. It recently announced plans to build a second battery plant in Finland. This will produce 30k tonnes of cathode products used in lithium-ion batteries, which are essential to the EV market. Johnson Matthey makes moves to recycle PGMs  Its also partnering with Plug Power, a green hydrogen company, to speed up joint development of high-performance electrolyser technology. I think this looks to be an exciting partnership boosting the credibility of both businesses. Together, theyre particularly focusing on developing a closed loop recycling system to recover and reuse as much critical PGM material as possible. Recycling is vital in making the process more sustainable. A well-established business  In its FY20/21 results, it said underlying sales and operating profit both fell 5%. While not great, this wasnt as bad as feared, given Covid-19s impact on car sales. A rise in commodity prices brought strength to its PGM division. Plus underlying operating profit in its Health division rose 15%. Overall, reported revenue increased 8% driven by higher average precious metal prices. The board raised its dividend 26% year-on-year to 70p. However, there are still risks attached to investing in this business. The companys move into EV and hydrogen is uncharted territory and there are no guarantees it will succeed. But I do think its promising that such a specialist company is attempting to go down this route. Despite its 2020 recovery, the Johnson Matthey share price is down 15% in three years. Yet its still trading on a price-to-earnings ratio (P/E) of 29, which looks high. But if it can pull off its EV angles, then I think it could have further to climb. So were not talking about a classic undervalued stock, but its one that may still reward investors in the future. Johnson Matthey has a stellar reputation, earnings per share are 106p and its dividend yield is 2.2%. I think this is a great business to ride the energy transition wave and Id happily add JMAT shares to my Stocks and Shares ISA.