Look for FutureFuel to Follow the RISE in the Stocks of its Peers
REGI and SZYM have risen 60% and 30% respectively in the last 3 months whereas FutureFuel barely reached the break-even point.
In other words, FutureFuel's stock price is well UNDERVALUED in spite of the outstanding performance and its impressive CASH balance. That cannot last long. So look for FutureFuel to catch up with the rise.in the stock of its peers.
Today, both REGI an SZYM rose, continuing their uptrend, while FutureFuel dropped. Investors who have followed SZYM would acknowledge that SZYM had been plagued with similar volatility (to thar which FutureFuel has currently) just before it started its recent rise.
It seems that once funds accumulate enough shares, the uptrend can begin. On that basis, look for FutureFuel to catch up with the rise of REGI and SZYM in the next few weeks..
Somewhat of an apples to oranges comparison since REGI/SZYM are only in biofuel/biodiesel and FF is a combination chemicals manufacturer/biodiesel producer. The Q1 earnings report was okay and the balance sheet still looks real nice. However, their proprietery herbicide contract with Arysta expires in September. That was approx. 7% of their 2012 revenues and if they don't find a replacement that loss will be felt. Definitely something to keep an eye on in their Q2/Q3 reports. Other than that it still looks like they're chugging along nicely
The exclusive contract with Arysta provides very little for the bottom line since FutureFuel is only reimburesed for its cost. In fact, "Arysta LifeScience North America Corporation supplies most of the key raw materials for production of the proprietary herbicide. There is no pricing mechanism or specific protection against cost changes for raw materials that FutureFuel Chemical Company is responsible for purchasing,"
Arysta must be very happy with this contract, and it is unlikely that Arysta will be able to obtain a better deal anywhere else.