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SunOpta Inc. Message Board

  • pastorcurtise pastorcurtise Aug 10, 2005 7:49 AM Flag

    Reflections on pricing action

    I'd like to point out that the entire stock price drop yesterday happened BEFORE the CC.

    I listened to the entire CC live, and almost asked a question about the stock buyback, but it was covered as one of the last q's by an analyst.

    The CC was very upbeat, and the future earnings prospects never better.

    That said, I do believe it is incumbent for SunOpta to spin off the Steam division ASAP, while oil is over $60, Congress is tripping over ethanol rah-rah, and we now have contracts, revenue and earnings to show.

    The market does not like confusion - stick with being an organic foods company!

    I lament that the Abengoa contract came in on top of earnings - there goes a great catalyst for stock movement.

    I will be very, very interested in seeing how all the analysts look at this - as I have said before, it is a complicated story for such a relatively small company - I hope they are up to the task.

    And - did I hear correctly on the CC that the company believes Steam will be a $100 MM division by 2008?

    Keep the faith. Patience is a virtue. What other company can you be so proud to be an owner of?

    Pastor Curtis.

    "Make all you can, save all you can, give all you can"

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    • Pastor - first off, always appreciate the positive delivery of your comments. That said, the spin-off of Steam would be a two-edged sword. Costs associated with being a free-standing company strongly impacted Minerals this quarter. I don't think Steam would survive that financial hit currently without surrendering control to the darkest pits of hell - aka venture cap <shudder>. If they could pull it off, the capital infusion would be a plus to STKL (those outstanding loans aren't gettin' any cheaper)- but I get the idea that the 'risk' of Steam is mostly in the past - so why should STKL dilute the 'gains' of Steam going forward by spinning off? Let's put a few solid contracts into a historical record and then consider the sagacity of a spin-off. As always, IMO.

      Side note (since I mentioned the cost of loans) - if I did my math correctly, and at 4:30 am there's no guarantee of that, the increased interest costs associated with acquisitions were enough to account for the earnings miss. Put it together with the costs from spinning off Minerals and it was definitely enough to account for it.

      Good luck longs!

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