Specialty chemicals company Koppers Holdings (NYSE:KOP) is feeding off of the commodities boom.

The company markets carbon compounds and commercial wood treatment products to customers in the aluminum, railroad, specialty chemical, utility, rubber and steel industries. Just as several of these industries have been hitting their stride in recent quarters, so has Koppers.

At a market cap of $1 billion, the Pittsburgh-based company is coming off a strong first-quarter in which it experienced double-digit sales growth and set itself up for a strong second-half of 2008. Longtime shareholders in the company have reaped the benefits of the company’s consistent performance.

Koppers had its initial public offering in February 2006 and has seen its stock price more than double over the course of the past two years. This success has been driven by a diverse portfolio of products that are supplied to a global customer base.

The company runs two principal business segments: carbon materials and chemicals, and railroad and utility products. In 2007, the carbon materials and chemicals business accounted for approximately two-thirds of Koppers’ net sales while the railroad and utility products segment made up the remaining third.

The carbon materials and chemicals business segment allows Koppers to serve as one of the world’s largest distillers of coal tar, which is processed into an assortment of products that serve as key inputs in the production of aluminum and the pressure treatment of wood. The railroad and utility segment focuses its efforts around functioning as one of the largest suppliers of railroad crossties in North America.

Koppers’ impressive growth was highlighted when its first-quarter results, reported on May 8, clocked in with a 26% pop in EPS on a 13% surge in sales on a year-over-year basis. The carbon materials and chemicals segment turned in an especially strong quarter as its sales rose by 28% versus the year-ago quarter. The business was the beneficiary of favorable pricing improvements.

The impressive progress caught the attention of Saul Ludwig, an analyst for KeyBanc (NYSE:KEY), who wrote in a May 20 research report that.“We believe this is a well-run company that is benefiting from strong primary aluminum production and, as we have stated in the past, Koppers benefits from higher oil prices, which is a significant plus in the current environment. Ludwig has a “buy” rating on Koppers with a 12-month price target of $55, which is above the stock’s closing price of $49.05 on Thursday.

Analysts are calling for Koppers to close out 2008 with EPS of $3.42 on $1.5 billion in revenues. These figures would mark 18% and 12% respective increases over the company’s 2007 results. Analysts are then looking for EPS to grow by another 15% in 2009 on an 8% rise in sales versus expected 2008 results.

One risk for potential investors to keep in mind is the revenue concentration of the Koppers portfolio. In 2007, its top 10 customers accounted for approximately 50% of the organization’s net sales. Its top two customers accounted for 10% and 8%, respectively. Although the loss of one of these major customers is not imminent, such a scenario could have a significant impact on the bottom line.

Another trend to keep an eye on in is the revenue stream from the company’s railroad and utility products business. In the first quarter, sales from this segment decreased by 10% on a year-over-year basis. This is attributable to a portion of the company’s railroad customers decreasing their inventory. The trend is expected to reverse in the second-half of the year.

“As Class 1 railroads are working down inventories in the first-half of 2008, we have learned through industry contacts that some railroads have increased their tie procurement prices,” Ludwig wrote. “We believe that this increase in procurement prices sets the second-half of the year for a step up in railroad tie volume.”

The fact that the company was able to overcome the adversity in its rail tie business and still produce first-quarter EPS of $0.63 versus analysts’ estimates of $0.54 is a testament to Koppers’ diverse portfolio of products. The company has continued to carry this momentum forward as the stocked surged 11.3% on Wednesday after an analyst from UBS (NYSE:UBS) upgraded the stock to a “buy” rating, noting that higher oil prices will drive freight traffic away from trucking and towards rails. If this proves to be true, then Koppers is certainly on the right track.