As pretty much everyone knows, I’m a big bull on $synm Syntroleum. There are many blogs I’ve created on Syntroleum and $nep Northeast China Petroleum. I suggest you take the time to search for them, they’re well worth the read.
So for awhile we have seen Syntroleum do nothing, but perhaps pull back to around $2 and it’s sitting here doing nothing. It’s weak, the volume is drying up, and there’s no action. In the meantime we see companies like $biof and $rtk running like crazy. Let me say I’ve done a ton of research on these companies — all of these companies, and I have started to add to my excessively long Syntroleum position at these levels.
There are a couple of things that makes stock run. One is b.s. news, and the other is fundamental numbers growth. Clearly it’s better to have the latter than the prior, however there are CEO’s out there who love to pump their stock. They usually do this because they are desperate for cash, and they want to pump the stock to a certain level so they can raise some quick bucks to keep things going — so in the long term they will survive.
I’m going to keep this blog real short and sweet, a few points to consider;
- Syntroleum does not require cash currently to complete their current plant.
- Syntroleum will have their plant online sometime in January, and they’ll be running full production of 75 million gallons of high grade biodiesel every year.
- Syntroleum will be miles ahead of their competition, by at least 1 year. That’s being generous.
- Syntroleum’s input costs are a fraction of their competition. Thus their fats cost less.
- The government just extended their bill on the bio-diesel tax credit of $1 per gallon, they go through this almost every year, and they always extend it by about a year.
- Even if the government decides to cancel the tax credit Syntroleum is the *only* company of their competitors that could possibly survive due to the speculation that their feed stock costs will go down. Bottom line, Syntroleum is in a powerful position being that Dynamic Fuels is 50% owned by Tyson.
- Rentek $rtk is known for pumping their stock. They will put out news whenever they can, at least for now. They need to build their stock price to raise money. They have no plant, they haven’t broken ground, they don’t have enough cash to even start a project. No plans, no drawings, nothing.
- Rentek recently put out a couple of press releases on potential partnerships, deals, etc. None of these have numbers, positions, strategies, etc. They are just press releases. You must take the time to read them.
- Rentek is at least 2 years behind, at least.
- The only chance Rentek has to catch up is if by some miracle another company with biodiesel plant decides to license something from them? Being that I studied their IP I’m not exactly sure what they can offer.
- Now compare the market caps of Rentek to Syntroleum and the story gets more interesting.
- Dynamic Fuels will be producing 75 million gallons of diesel a year starting in 2010. So maybe next year they do half that. Do the math. Syntroleum gets half.
- Syntroleum will require more money down the road to create another plant — knowing the CEO they will not do a raise at a low level. They can sustain part of it with the revenues they’ll be producing from their Louisiana plant. After that they may need to raise money, and by then the institutions will be all over this thing.
- Syntroleum is my favorite American small cap company.
Last thing. Syntroleum will *not* pump their stock for the sake of pumping it. Their CEO is all about nuts and bolts, focussed on real tangible numbers growth. No bullshit, no pump and dumps, just fundamentals. Don’t expect this stock to spike like or with RTK or BIOF. The only way we see this stock go is if people keep talking about it, OR they put out good news. I expect both to come in the near future. ..and as experienced traders will tell you, there’s nothing more beneficial to long term shareholders than when fundamentals meet technicals. Look at $nep for proof of that.