Ajinomoto Continuing To Shift Toward Growth And Margins

A Japanese processed food company wouldn't necessarily stand out as a prime investment idea, given the sluggish growth prospects in the Japanese domestic market. Ajinomoto (OTCPK:AJINY) is an exception, though, in large part because of the company's efforts to position itself in growing emerging markets and improve the margins in its core Japanese market. Add in the potential for management to further revise and upgrade its non-food businesses and I think there is a credible case for bullishness here.

I'm expecting Ajinomoto to leverage low-single-digit revenue growth into mid-single-digit FCF growth, supporting a fair value about 5% to 10% higher than today's price. The liquidity for Ajinomoto's ADRs is not great, though, and I would encourage investors to consider the Japan-listed shares (2802.T) as a much more liquid option.

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Ajinomoto Continuing To Shift Toward Growth And Margins

Seeking Alpha: The Pepsi Launch Approaches, But Senomyx Needs To Deliver On Its Own Sales Efforts

The wait drags on for Senomyx (NASDAQ:SNMX), testing the patience of shareholders ahead of a long-anticipated launch from its major partner PepsiCo (NYSE:PEP). Chemophobia-laced "healthy living" nonsense aside, the fact remains that additives remain integral to the packaged food and beverage industries and a large revenue opportunity for Senomyx in the coming years.

The key question remains as to whether Senomyx can convert that large opportunity to real sales. Although the company's direct sales efforts have long lead times (up to, or beyond, two years in some cases), some fruits of those efforts should be visible in the next twelve months. Likewise, investors will know soon enough whether PepsiCo is going to launch products incorporating Senomyx's Sweetmyx S617 with its full marketing vigor or whether it will be a more cautious and limited effort. Delays in commercialization efforts and increased execution risk in my model have led to a lower fair value, but that fair value target remains close to $10 and offers substantial upside if those orders do in fact materialize.

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The Pepsi Launch Approaches, But Senomyx Needs To Deliver On Its Own Sales Efforts

Seeking Alpha: Senomyx Is Getting A Second Wind On Commercialization Potential

I can't stand casinos, so I suppose I use investments like Senomyx (SNMX) to scratch that speculative itch. That's not to say that I don't do the same level of due diligence before, but I go in with open eyes about the likelihood of the story working out. For most of the past three years, it didn't look like this story was going to have a happy ending, as the Street's frustration with an apparent lack of progress in the company's research efforts and licensing relationships took the stock from over $7 to below $2.

Now it looks like the story is heading in the other direction. Although licensing relationships with companies like Nestle (OTC:NSRGY) and Ajinomoto really haven't delivered much and the company is pursuing an uncertain path of commercializing its own compounds, management believes that its key asset (S617) may get FDA approval in the first quarter of 2014 and start appearing in PepsiCo (PEP) products next year.

With management issuing bold guidance for profitability in 2015, these shares may still have room to run and reward those shareholders who've had the patience to hang on this long. In fact, if Pepsi beverages containing S617 can get 20% of the U.S. diet soda market and Senomyx's own commercialization strategies can deliver 5% share in markets like sugar reduction and savory enhancement, upside of more than 80% is possible from here.

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Senomyx Is Getting A Second Wind On Commercialization Potential