You may have heard about SunOpta's vertical monopoly on private label organic foods (notably SOYMILK and Fruit Juices) sold at many retailers including (but not limited to) Trader Joe's, Safeway, Whole Foods, and Walmart.
Now here are a few links to round out the picture - SunOpta is also "Best of Breed" in Cellulosic Ethanol, the kind of ethanol Bush talked about in his State of the Union address, "advanced ethanol" made from corn stalks, straw, and switchgrass:
Vertical mononopolies should be able to generate a higher profit margin than 2 or 3%.
Actually Sunopta eps misses over and over in 2005 were do to HIGH competition in Oat Fiber business (not monopoly). That will continue in 06' Rettenmaier expanded their production plant in late 05'....That's been the cause of STKL lack of eps growth.
As far as Ethanol STKL is NOT in the Ethanol business. They try to sell the pretreatment equipment (steam explosion, old technology) only two sales too date...both funded by Grants from Dept of Energy. Unfortunately after these sales, STKL contacted every Ethanol producer in the US and We have not heard of one new sale? We also have not heard of any Royalties...zero. Actually their partner Abengoa cut STKL out of part of the pretreatment equipment sale on the second deal. Why would Abengoa risk losing STKL?
STKL is NOT in the ETHANOL production business.
STKL has announced zero sales of their equipment to the SAVY private sector. US gov will give anyone money that fills out the Grant paper work.
PEIX gets private investment from Gates, they are expected to do $260 mill in sales from ethanol in 07'. While STKL didn't get the investment $$ and they will do $0 in sales from ethanol in 07'. If STKL is lucky someone may buy a pretreatment machine....so far they have ZERO sales to private sector.
Wild even told STKL management about Sir Branson interests in biomass ethanol last year and .....result.....NO NEWS, No SALES.
Do you get the picture. STKL is up on no EPS growth. NO new Pretreatment sales. And they have a history of 6 eps misses in a row.
Wild lives on pumping the stock on industry stories... what sustains stocks higher is growth EPS.
STKL eps growth rate will actually drop from lack of capital most Top line Rev growth is from acquisitions the result of Dilution & New Debt....not internal growth. Thats why eps aren't going up.
House of Cards. Why the last Acquisition totally unrealted to existing business...especially if they have the holy grale of biomass ethanol?
Why did Shell chose Iogen over STKL?
Call IR....verify....they already contacted the ethanol producers....everyone in the inducstry knows about STKL....except you.
It's good to see someone with a list of negatives to help provide balance on the board.
Let's see if I understand-
1.SunOpta is only 50% organic. Probably true, as 80% of their revenues are from NATURAL and organic foods. The fastest growing portion of their food business is organic, and they supply organic ingredients to a large portion of companies that manufacture organic products.
They also promote organic farming by contracting with organic farmers and supplying organic seed.
2.0% ethanol. It's true that STKL doesn't make ethanol, except in pilot plants. Their role is as a pioneer of cellulose ethanol, in conjunction with Abengoa and Novozymes. Revenues to date come from a $6million contract with Abengoa, and more to be announced. Future revenues related to ethanol are unconfirmed at this point. Sales data for bioProcess are still obscured by the company.
3.EPS growth rate will drop. That's a new one, not sure I see any reasoning behind that.
4.Revenue growth is from acquisitions, which are bad- they cause dilution and reduce earnings. I'd say it's a balancing act, and agree that acquisitions can have some short-term negative effects, but also very positive long-term effects. Depends on what is acquired, at what price, etc.
5.Insider sales are bad. Apart from the Trust sale, who is selling?
6.Margins are too low. I guess we'll have more data on this next week. Good try, though!