For most of the past decade, investors have been badly burned by
energy-tech and bio-whatever. In many cases, investors bought into bad
business models that were built more on hype than sound economic
principles. Yet, throughout that time, ethanol and biodiesel use has
continued to grow and the U.S. government has continued to encourage
(and in many cases, mandate) increased use of these fuels.
That leaves the very small FutureFuel (FF)
as an interesting, albeit very risky, stock to consider. Not only does
FutureFuel have a real biodiesel plant up and running, but it uses a
different feedstock than most if its competitors. FutureFuel also has a
specialty chemical business that not only offsets some of the volatility
of the biodiesel business, but also offers growth prospects in its own
right.
Continue to the full article here:
FutureFuel Looks Undervalued, But Mind The Volatility
Showing posts with label Amyris. Show all posts
Showing posts with label Amyris. Show all posts
Friday, December 21, 2012
Wednesday, January 4, 2012
Investopedia: Cosan Could Look A Little Sweeter In 2012
Ethanol has a dicey reputation with investors. The petroleum alternative has enticed more than a few true-believing green investors into thinking it's somehow more than a commodity, before dashing their dreams and denting their net worth. Brazil's reputation is scarcely better, as investors have had to ride the ups and downs of a promising, but very volatile, market for years. Combining these two into one investment may seem like lunacy to some, but Cosan (NYSE:CZZ) may be a name to consider for 2012 and beyond.
One of the Biggest, One of the Best
Cosan is one of the largest sugar and ethanol producers in the world and the largest sugarcane crusher. The company operates 24 mills, two refineries and two ports in Brazil and currently has a little over 60 million tonnes of crush capacity. In fact, about 5% of the world's ethanol comes out of Cosan facilities.
To read more, please click here:
http://stocks.investopedia.
Thursday, November 10, 2011
Investopedia: Solazyme May Pay Off On Green Dreams
As embarrassingly high-profile green company bankruptcies, in recent weeks, have reminded investors that governments may be poor at picking long-term winners, it is also worth repeating that it's not easy being green. Conventional methods of producing energy are cheap, easy and reliable, and those are high hurdles for new technologies to surmount. Nevertheless, while there is ample uncertainty left, Solazyme (NASDAQ: SZYM) is a green-tech company with technology well-worth a look from aggressive investors.
Quarterly Results are Trivial
In the larger scheme of things, Solazyme's quarterly earnings reports don't matter much right now because, frankly, there are no earnings. Solazyme did announce that revenue rose 93% from last year, but with total revenue still below $9 million, it's not all that significant. Likewise the GAAP net loss of $14 million is not so significant.
Follow this link for the full piece:
http://stocks.investopedia.
Quarterly Results are Trivial
In the larger scheme of things, Solazyme's quarterly earnings reports don't matter much right now because, frankly, there are no earnings. Solazyme did announce that revenue rose 93% from last year, but with total revenue still below $9 million, it's not all that significant. Likewise the GAAP net loss of $14 million is not so significant.
Follow this link for the full piece:
http://stocks.investopedia.
Friday, April 29, 2011
Investopedia: Total Takes A Shine To SunPower
Admittedly, it does not take a lot to get conspiracy theorists fired up, but the deal announced Thursday night between Total SA (NYSE:TOT) and SunPower (Nasdaq: SPWRA) should have some of them foaming at the mouth.
Many energy companies bought solar power companies in the 1970s and 1980s, only to find that the technology was far from a point where it was commercially viable (conspiracy theorists choose to believe that the energy companies deliberately "killed" solar power to maintain the hegemony of fossil fuel). Now the picture may be different. While solar still requires sizable subsidies to make economic sense in many places, the technology has gotten much better and solar assets may prove invaluable to energy companies looking to diversify and stay relevant for the long term. (For more, see Spotlight On Solar Stocks.)
The Terms of the Deal
While SunPower is characterizing the deal with Total as a "strategic partnership," the reality is that Total will be acquiring 60% of the company's shares and will effectively control the company's board. For this, the company is paying $23.25 per share (nearly $1.4 billion in total), a 45% premium to Thursday's close.
Total is also extending $1 billion in credit support to help accelerate the growth of the company (and this has been a chronically capital-hungry industry).
Please click below for the full column:
http://stocks.investopedia.
Many energy companies bought solar power companies in the 1970s and 1980s, only to find that the technology was far from a point where it was commercially viable (conspiracy theorists choose to believe that the energy companies deliberately "killed" solar power to maintain the hegemony of fossil fuel). Now the picture may be different. While solar still requires sizable subsidies to make economic sense in many places, the technology has gotten much better and solar assets may prove invaluable to energy companies looking to diversify and stay relevant for the long term. (For more, see Spotlight On Solar Stocks.)
The Terms of the Deal
While SunPower is characterizing the deal with Total as a "strategic partnership," the reality is that Total will be acquiring 60% of the company's shares and will effectively control the company's board. For this, the company is paying $23.25 per share (nearly $1.4 billion in total), a 45% premium to Thursday's close.
Total is also extending $1 billion in credit support to help accelerate the growth of the company (and this has been a chronically capital-hungry industry).
Please click below for the full column:
http://stocks.investopedia.
Wednesday, January 12, 2011
Investopedia: DuPont - From Gunpowder To Plastics To Yogurt
If a company is going to hang around for a couple of centuries, it is a good bet that it will have to change and adapt with the times. DuPont (NYSE:DD) is an excellent case in point - while grouped into the generally stodgy, boring, and cyclical "chemicals" industry group, DuPont has a rather remarkable record of remaking itself and getting involved in new growth markets. Though DuPont's record of diversification is not flawless, investors should at least be willing to give management the benefit of the doubt with this latest acquisition.
3D - DuPont's Danisco Deal
DuPont announced Monday morning that it would acquire Danish ingredient and enzyme company Danisco for $5.8 billion in cash and the assumption of an additional $500 million of Danisco's debt. The deal gives a better than 25% premium to Danisco shareholders and will likely produce more than 10% earnings dilution for DuPont in the first year.
As has already been widely reported, this is an unusually large deal for DuPont - the largest deal the company has done since it acquired Pioneer for nearly $8 billion more than a decade ago. That deal, though, has proven to be an exceptionally good move in hindsight, as DuPont is now one of the leading advanced seed trait companies in the world. (For related reading, see 2010's Highest Performing DJIA Stocks.)
Some New, Some Old
About two-thirds of Danisco's revenue comes from products for the food industry - an industry that DuPont has heretofore not been much of a focus for the company. In addition to a sweeteners business that competes with the likes of Tate and Lyle (Nasdaq:TATYY), Danisco sells a host of so-called "enablers" that include emulsifiers, stabilizers, flavor enhancers, and so on. In more practical terms, when you buy a bottle of salad dressing and it stays shelf-stable for weeks, that is because of the kinds of products Danisco produces.
Please click below to continue to the full piece:
http://stocks.investopedia.
3D - DuPont's Danisco Deal
DuPont announced Monday morning that it would acquire Danish ingredient and enzyme company Danisco for $5.8 billion in cash and the assumption of an additional $500 million of Danisco's debt. The deal gives a better than 25% premium to Danisco shareholders and will likely produce more than 10% earnings dilution for DuPont in the first year.
As has already been widely reported, this is an unusually large deal for DuPont - the largest deal the company has done since it acquired Pioneer for nearly $8 billion more than a decade ago. That deal, though, has proven to be an exceptionally good move in hindsight, as DuPont is now one of the leading advanced seed trait companies in the world. (For related reading, see 2010's Highest Performing DJIA Stocks.)
Some New, Some Old
About two-thirds of Danisco's revenue comes from products for the food industry - an industry that DuPont has heretofore not been much of a focus for the company. In addition to a sweeteners business that competes with the likes of Tate and Lyle (Nasdaq:TATYY), Danisco sells a host of so-called "enablers" that include emulsifiers, stabilizers, flavor enhancers, and so on. In more practical terms, when you buy a bottle of salad dressing and it stays shelf-stable for weeks, that is because of the kinds of products Danisco produces.
Please click below to continue to the full piece:
http://stocks.investopedia.
Thursday, January 6, 2011
A Blessedly Quiet Quarter For Monsanto
It looks things have finally quieted down a bit at Monsanto (NYSE: MON). After a string of bad results, lower guidance, and widespread commentary that Syngenta (NYSE: SYT) and DuPont (NYSE:DD) had closed the gap and would take the lead over Monsanto, this company seems to have at least found a base of stability. Of course, the fiscal first quarter is usually a very quiet quarter for the company, so that "good news" only goes so far.
The company did report sales growth of 8% and managed to slightly exceed the consensus guess of analysts. Gross profits were up 11%. Looking closer, I would have liked to have seen better from the seed business (up around 14%), but the fertilizer business did alright (though down about 2%).
On the R&D front, the company reported higher spending to the tune of 13% growth. Nine pipeline projects advanced, and the company now has 5 Phase 4 projects - including the high-potential drought-resistant corn seed that should be launched in 2012/2013. The collaboration with BASF seems to be paying off, though I wish the company had more to brag about in terms of high-value projects in soybeans, cotton and canola. All of the high-value pipeline projects seemed to be concentrated in corn (which is a huge market, to be sure). Then again, a long stream of mid-value soybean, cotton, and canola projects could be very lucrative (the difference, I suppose, between swinging for home runs and consistently hitting singles and doubles).
The company really didn't change its guidance, so I expect investors to be nervous into and through the second quarter. To that end, I would expect a lot of volatility in the shares as analysts read (or invent) the tea leaves along the way. The second quarter is the company's biggest and they really need to perform well here to get investors excited about the company. I happen to firmly believe in the long-term prospects, but a little near-term performance wouldn't be so terrible either.
I am curious to see what the company plans to do with its cash pile and its M&A strategy. I don't see much that the company would buy in the seed business, though I acknowledge there are numerous private companies out there and I'm not 100% up-to-speed on all of them. And I suppose it's not crazy that they could be interested in a company like Amyris (Nasdaq: AMRS). It also would not shock me if the company decided to expand its fertilizer business - I don't think the market would like that at all (putting capital into a cyclical business that doesn't have the ROIC potential of the seed trait business), but it could make a certain amount of sense.
At this point, I see a fair value of about $79 on Monsanto shares. That does not seem like a great bargain relative to today's price, but I think my estimates are a little conservative. I'm only looking for about 10% revenue growth per annum and a free cash flow yield of 18% in five years' time - I think the company could easily surpass both metrics.
BUY Monsanto
Disclosure: I own shares of Monsanto
The company did report sales growth of 8% and managed to slightly exceed the consensus guess of analysts. Gross profits were up 11%. Looking closer, I would have liked to have seen better from the seed business (up around 14%), but the fertilizer business did alright (though down about 2%).
On the R&D front, the company reported higher spending to the tune of 13% growth. Nine pipeline projects advanced, and the company now has 5 Phase 4 projects - including the high-potential drought-resistant corn seed that should be launched in 2012/2013. The collaboration with BASF seems to be paying off, though I wish the company had more to brag about in terms of high-value projects in soybeans, cotton and canola. All of the high-value pipeline projects seemed to be concentrated in corn (which is a huge market, to be sure). Then again, a long stream of mid-value soybean, cotton, and canola projects could be very lucrative (the difference, I suppose, between swinging for home runs and consistently hitting singles and doubles).
The company really didn't change its guidance, so I expect investors to be nervous into and through the second quarter. To that end, I would expect a lot of volatility in the shares as analysts read (or invent) the tea leaves along the way. The second quarter is the company's biggest and they really need to perform well here to get investors excited about the company. I happen to firmly believe in the long-term prospects, but a little near-term performance wouldn't be so terrible either.
I am curious to see what the company plans to do with its cash pile and its M&A strategy. I don't see much that the company would buy in the seed business, though I acknowledge there are numerous private companies out there and I'm not 100% up-to-speed on all of them. And I suppose it's not crazy that they could be interested in a company like Amyris (Nasdaq: AMRS). It also would not shock me if the company decided to expand its fertilizer business - I don't think the market would like that at all (putting capital into a cyclical business that doesn't have the ROIC potential of the seed trait business), but it could make a certain amount of sense.
At this point, I see a fair value of about $79 on Monsanto shares. That does not seem like a great bargain relative to today's price, but I think my estimates are a little conservative. I'm only looking for about 10% revenue growth per annum and a free cash flow yield of 18% in five years' time - I think the company could easily surpass both metrics.
BUY Monsanto
Disclosure: I own shares of Monsanto
Friday, December 17, 2010
One Small Step For Amyris
Exciting stories are usually built with a lot of boring announcements. To that end, Amyris's (Nasdaq:AMRS) recent announcement that it had finalized a joint venture with Brazil's Cosan (NYSE:CZZ) is not surprising or exciting, but it is a good example of the blocking-and-tackling type of announcements that will go into making the Amyris story and business model work over time.
A Deal That Works For Both Sides
Amyris and Cosan will work together to produce and sell various so-called base oils that will be made with the farnesene that Amyris will produce in other facilities. It is a pretty typical win-win type of deal. Amyris needs to find as many customers as possible for its farnesene, while Cosan needs diversification away from ethanol as an end product of Brazil's prodigious sugarcane production. (For more, see Brazilian Stocks To Watch In 2011.)
Just One Brick In The Road
Ultimately, the success of this Amyris-Cosan venture in base oils is not critical to the overall success of Amyris, but it highlights what I think is an important part of the Amyris business model - working with other companies and finding as many potential markets for its products as possible. Where many failed ethanol companies like VeraSun and Aventine went wrong was in being just another commodity producer, but one that relied upon other commodity feedstocks (corn, notably) and government subsidies. In other words, they were refiners with pretty much one product to offer.
In contrast, Amyris has found a lot of potential uses for its genetically-modified yeast. The first key product will be farnesene, which can be used in a wide range of products including diesel and jet fuel additives, lubricants, detergents and flavors and fragrances. As time goes on, and the company's yields improve, it may be possible to produce a much wider range of products including fuels themselves, plastics and synthetic rubber. (For more, see Back To The Future With Ethanol.)
Please click below for the full piece:
http://stocks.investopedia.
A Deal That Works For Both Sides
Amyris and Cosan will work together to produce and sell various so-called base oils that will be made with the farnesene that Amyris will produce in other facilities. It is a pretty typical win-win type of deal. Amyris needs to find as many customers as possible for its farnesene, while Cosan needs diversification away from ethanol as an end product of Brazil's prodigious sugarcane production. (For more, see Brazilian Stocks To Watch In 2011.)
Just One Brick In The Road
Ultimately, the success of this Amyris-Cosan venture in base oils is not critical to the overall success of Amyris, but it highlights what I think is an important part of the Amyris business model - working with other companies and finding as many potential markets for its products as possible. Where many failed ethanol companies like VeraSun and Aventine went wrong was in being just another commodity producer, but one that relied upon other commodity feedstocks (corn, notably) and government subsidies. In other words, they were refiners with pretty much one product to offer.
In contrast, Amyris has found a lot of potential uses for its genetically-modified yeast. The first key product will be farnesene, which can be used in a wide range of products including diesel and jet fuel additives, lubricants, detergents and flavors and fragrances. As time goes on, and the company's yields improve, it may be possible to produce a much wider range of products including fuels themselves, plastics and synthetic rubber. (For more, see Back To The Future With Ethanol.)
Please click below for the full piece:
http://stocks.investopedia.
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