Now if the May STKL eps release is from the Q1 of 2006...that means the new Rettenmaier plant built the end of 2005 is just starting to impact the industry.
Better yet go back and listen to JK on the last 4 conference calls you hear analysts ask about the Oat Fiber competition....it destroyed every quarter in 2005. Now they say its behind them. But this the problem Oat fiber is not a MONOPOLY its a COMMODITY busines and in the conf calls STKL management repeats over and over they defended market share with price cuts. With Rettenmaier increasing production capacity that won't change.
Worst yet the fruit business has smaller margins than the other STKL businesses....comparing this company to anything but a low margin commodity food play is true smoke. But Its worth 40x trailing eps.
Did you like the pro forma guidance in the last Quarters press release....we all know what Pro Forma is vs. GAAP right. Make believe eps= Pro Forma.
No, it's not. We are familiar with that link. proncon produced it back when stkl was in the 7s. It says the plant R. & Sohne plant was gonna start operations in late 2005. In the last cc, JK said that there was indeed a building built, but that the parking lot was empty, and that they had no evidence (and they'd be the guys to know) that it was producing oat fiber.
"Better yet go back and listen to JK on the last 4 conference calls you hear analysts ask about the Oat Fiber competition....it destroyed every quarter in 2005. Now they say its behind them. But this the problem Oat fiber is not a MONOPOLY its a COMMODITY busines and in the conf calls STKL management repeats over and over they defended market share with price cuts. With Rettenmaier increasing production capacity that won't change"
I think this is where your arguement should be. It is very true that stkl had to slash their prices to keep their market share. This was essential because demand was shrinking. Now, demand is picking up, and it might be reasonable to expect that R&S's Cedar Rapids plant will be put into operation. Then the real question becomes: how big is demand now? And how fast is demand growing? Wild has been diligently trying to figure that out, but that is hard to do when you don't actually have the supply #s and demand #s.
I'll assume that you're simply putting out this information to try and inject a picture of risk to the equation in order to dampen the sometimes irrational exhuberence that can occur around stocks. Having said that, here are some of the reasons why I disagree.
The reason I discovered this stock was because of their Jamba Juice contract. If JJ continues their 20% growth rate that will continue to drive sales in their fruit business. I personally think JJ's growth will be accellerating going forward. (And yes I own stock in them too.)
They have indicated that their soy divisions are operating at high capacity and are expanding their organic foods into new markets. Organic foods is a growth business these days.
I don't know what to make of the Minerals group but it's at least revenue if not a big earnings contributor.
As far as the ethanol, the premium that you pay for the food business is based partly on the potential of this division. Management has expressed a desire to move into ethanol production facilities of their own (reusing their own waste products) in addition to licensing their "tack on" pretreatment systems (Stake Tech does sound a bit dorky which is probably why they changed the name :) While I'm still not 100% convinced that they are a player, this will be evident as the year proceeds (if it happens). I'm not a trader so I'm willing to wait and see. If their systems really do add on 10-15% increase in ethanol production then I can't see why a plant WOULDN'T want to add them. They can't be that expensive amortized over the life of a plant. Even if they only use it on their facilities they will still be an ethanol producer and given demand and the shortages we're already seeing I can't see ethanol prices tanking any time soon. We use 140+ BILLION gallons of gas per year and ethanol production, while rising, isn't even in that ballpark. To switch to E85 if will take a HUGE effort and there will be room at the table for lots of companies.
As with all investments, there are risks associated with any business. I'm sure oil prices could drop (I doubt it). Competition could cream them. What else is new? ADM could crush them. Who knows? Sunopta still seems like a reasonable investment to me. I could be wrong. Time will tell.