full-time investing; total portfolio up over 130% in 2009; but 2010 sucks!
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OT: Anyone know how many subscribers Chen Lin has for his newsletter? He may be making more money these days from his newsletter than from his stock picks.
PEIX ... the bounce in ethanol price should help this stock, but there are probably still some stockholders in pain for not selling 50% higher a couple of weeks ago.
Volatility could stay with this stock for awhile.... IMHO
'peeker
PEIX: Could also go down due to Q&A on the call.
On the bright side, there is Madera. On the dark side, there is the warrant situation, fluctuations in ethanol, corn, train shipments, natural gas prices. They need to clear up uncertainty if they are going to regain some bruised loyalty. For instance, will they state how their accounting method will allow in-the-money warrants to negatively impact the current qtr's earnings per share, if the stock price were to remain the same? My point is nobody really knows the amount of leverage involved with the warrants. It was certainly a surprise to see them actually declare an overall loss/share yesterday due to the increased value of the warrants.
As to costs, do they still have that sweet deal on cut-rate government sugar for some of their ethanol production, or has that all been processed, and they are back to just using corn like everybody else?
Oh, nevermind, I need to obsess over something else.
SFY: Bobwin's your guy for "What will make SFY fly". Of course he may be gnashing his teeth this morning. I think the idea is that they sell some of their Louisiana assets and allocate that money toward increased drilling in their Eagle Ford (S. Texas) fields. But Bobwins can provide better insight.
Trolley, ha yeah. As it turns out there has been a certain amount of people talking their book on PEIX (calling out the positives while reducing their positions, even though it will surely rebound to the "30s" or "40s" eventually. Of course talking book is a natural human condition, so I'm not really accusing anyone of evil misdeeds here.
I'd say it's time for Keith Shaeffer to throw out another jewel.
Regards,
'peeker
ps> I reduced my PEIX by half afterhours yesterday because of growing uncertainty in future earnings.
SFY earnings not great ($.12/sh) but makes comments on potential transactions:
"The Company is currently engaged in negotiations regarding a joint venture arrangement for a portion of our natural gas properties in the Eagle Ford area, principally our natural gas properties in the Fasken area.
Swift Energy is also negotiating with prospective buyers to sell some or all of our Austin Chalk and Wilcox assets in Central Louisiana and expects to either complete a sale of some or all of these properties or pursue an ongoing development plan of its own."
PEIX: Aha! I'm confused, as I was trying to divide the operating income ($34.9 million) by number of shares outstanding (19.7 million), resulting in about $1.77/share in operating income.
However, I then realized I didn't know the fully diluted number of shares (19.7 million shares outstanding plus unexercised in-the-money warrants).
Anybody know the correct number for unexercised in-the-money warrants?
TIA,
'peeker
PEIX: The one-analyst earnings estimate I see on Scottrade and Ameritrade is $3.30/share. Do I expect a "miss"? I have no way of knowing, but look at GPRE who beat their earnings estimate today by about 35%, they are up less than 4%. I don't know whether the PEIX analyst who estimated $3.30 accounted for the charge required for warrants. Somehow I rather doubt it.
Ethanol stocks are NOT typical stocks, so we should not expect the price to rocket higher on a single quarter's result. The earnings potential of commodity stocks change daily with the costs of producing the commodities (ethanol) and cost drivers (corn, shipping, natural gas). Earnings estimates for future quarters are less than the $3.30 estimate, and you certainly cannot come up with a narrow range for a forward P/E estimate.
Some here were throwing targets around recently like $30 to $40/share after PEIX reported blowout earnings. I just don't see it happening. The price of ethanol has fallen, the price of corn has risen, and expectations have come down considerably at this point.
If PEIX does report great earnings today after the close, there will be lots of traders ready to take their profits in afterhours and tomorrow morning. However, in terms of risk vs. reward, what happens if PEIX only earned $2.00/share. Even with a well-worded release that explains the negative effect of warrants to net earnings, the market will be looking ahead to a quarter that will see profits less than the most recent quarter. I still don't like the fact that they will not have their conference call til tomorrow at 11am eastern time, meaning there will probably be a few hours of trading with significant "uncertainty".
Sorry to blab so much about it. I am long, by the way, and I'm still not sure if I'll sell some before the close today. However, I won't be buying any.
Reality Check: PEIX will likely have trouble meeting the One Analyst estimate of $3.30 for the most recent qtr due to charges against earnings for Warrant adjustments. An Earnings miss vs. expectations is never celebrated.
It is interesting that the market is allowing PEIX to be up 10% today, but it will be even more interesting to see whether it sells off substantially after an earnings miss this afternoon. The conference call will not take place until 11am eastern time tomorrow, so the earnings announcement needs to be very clear.
Of course if the company were to project revenues and an earnings range for the quarter in-progress, that would also have great bearing on stock price swings tomorrow, but I doubt that will happen due to the volatile nature of corn and ethanol price swings.
Excellent post on PEIX. Thanks for sharing your thoughts on volatility and variables. Bravo!
ZOES IPO'ed today. Growing fast food, Mediterranean style. Interesting concept: Mediterranean cuisine served as fast food with southern charm.
Zoe's Kitchen (ZOES)
Fundamental Grade: A-
Zoe's Kitchen (ZOES), a fast casual restaurant chain serving Mediterranean-inspired food, is set to price its 5.83 million share IPO next week in the $11-13 range. All of the shares are being offered by the company with no selling stockholders. ZOES should have a market cap around $220 million, assuming the mid-point of the expected range, so it's quite small. ZOES does not expect to pay a dividend for the foreseeable future. This deal is being led by Jefferies, Piper, Baird, Wm Blair, Stephens and Stifel.
The Zoe's Kitchen Concept: Bringing Mediterranean to the Masses
Zoe's Kitchen is a fast growing, fast casual restaurant concept serving Mediterranean-inspired dishes delivered with Southern hospitality. In fact, ZOES is already the largest US-based fast casual restaurant concept focusing on Mediterranean cuisine. ZOES offers modified table service where, after ordering at the counter, the customers' food is served at their table on china with silverware. Team members routinely check on them throughout the meal and then bus their table, all without the expectation of receiving a tip.
Its menu offers meals made generally from scratch. ZOES prepares its food using traditional Mediterranean preparation methods such as grilling and baking. There are no microwaves or fryers in its restaurants. The menu offers an abundance of fresh fruits, vegetables and herbs, grains, olive oil and lean proteins. Management likes to say it serves "real food" -- from hummus, made fresh daily and served with warm pita bread, to flavorful salads and kabobs. By real food, ZOES means food made from simple ingredients, such as raw vegetables, fruits and legumes. Also, ZOES serves beer and wine in a majority of its restaurants.
The flavors in its menu are "born in the Mediterranean and raised in the South." Inspired by family recipes, its menu features Mediterranean cuisine complemented with several Southern staples. ZOES offers items such as its Mediterranean Tuna sandwich and entrées such as chicken, steak and salmon kabobs and chicken and spinach roll-ups (tortillas stuffed with feta cheese, grilled chicken, sundried tomatoes and spinach). Each is served with a choice of a side item such as braised rosemary white beans, rice pilaf, pasta salad, roasted vegetables or seasonal fruit.
Its food is sought out as a healthy fast food alternative as its meals are predominantly preservative- and additive-free. Also, ZOES caters to a variety of dietary needs by offering vegetarian, vegan, gluten-free and calorie conscious Simply 500 menu selections. Its menu is appealing during both lunch (60% of revs) and dinner (40%). The average customer ticket in 2013 was $9.57.
Its target customer is educated and affluent women. Its female customers generally lead active lifestyles, have an average annual household income of over $100,000 and a majority of them are college educated. Management believes this demographic represents a highly-desirable customer base. Also, the company believes that its attractive demographic mix, high repeat visit rate and its ability to draw an average of 2,500 customers to each restaurants per week makes ZOES a desirable tenant to landlords.
The chain was founded in 1995 by Zoe and Marcus Cassimus in Birmingham, Alabama. ZOES has grown from 21 restaurants across seven states in 2008 to 111 restaurants across 15 states mostly in the south. Its largest states are Texas (29 locations), Alabama (14), Georgia (13) and North Carolina (11). Most locations are company-owned with just six franchised locations. Its company-owned restaurants have generated 16 consecutive quarters of positive comparable restaurant sales growth, due primarily to increases in customer traffic.
Key Points from the IPO Roadshow
If you really want to get a good handle on whether it's worth investing in ZOES, we think a couple of slides from management's IPO roadshow lay out the case quite well. The first is the average revenue per restaurant. As we mentioned earlier, and as you can see below, ZOES came in at $1.47 million in 2013. This ranks behind only PNRA ($2.48) and CMG ($2.17) in the fast casual segment and it's ahead of recent high profile IPOs NDLS (1.18) and PBPB (1.00). So that's pretty impressive.
Another key stat, in our view, is that while ZOES currently ranks behind larger rivals PNRA and CMG in revenue per store, ZOES is much farther along at this point in its growth cycle than PNRA and CMG were back then. ZOES is currently at $1.47 mln while PNRA and CMG were at $1.27 mln and $1.06 mln, respectively, at the same point in their respective growth stages.
A final stat relates to how early these various restaurant chains are in their respective growth cycles. ZOES compared its current restaurant count relative to what it sees as its potential. It currently has 111 stores and it sees 1,600+ potential long term. That works out to only 7% of its current potential. NDLS has 380 locations and 2,500 potential locations for a 15% figure. PNRA is at 44% (1,777 stores vs potential for 4,000) and CMG is at 46% (1,595 vs 3,500). The point here is that ZOES management believes it is just starting to scratch the surface of its potential so there is a lot of growth ahead. Of note, ZOES believes it can double its restaurant count within four years.
Aggressive Expansion: In 2012, ZOES opened 16 restaurants, and in 2013, it opened 27 restaurants. In 2014, the company plans to open 28-30 restaurants. The goal is to double its restaurant base in the next four years. Management believes its concept has resonated with consumers, which has facilitated strong restaurant growth over the past several years, and since 2008, ZOES has not moved or closed a single restaurant. ZOES believes it's in the early stages of its growth trajectory as they see a long term total restaurant potential in the US in excess of 1,600 locations.
Financials
Taking a quick look at the financials, they are a bit of a mixed bag. As you'll see in the table below, ZOES is not profitable but they do have strong top line growth. Revenue grew by 59% in 2012 then by 46% in 2013 to $116.4 million. Much of this is being fueled by ZOES' aggressive restaurant expansion. And that growth is expected to continue as management has set a goal of doubling its number of locations within four years and they see a long term potential of 1,600 locations (they ended 2013 with 102 locations).
However, it's not just new locations that are driving the growth. As mentioned earlier, ZOES has also seen a nice increase in average revenue per location: $1.21 mln in 2010 then $1.30 mln then $1.42 mln and then $1.47 mln in 2013 as they seek to maximize production at each location.
In terms of margins, as you can see in the table below, ZOES has very thin operating margins, in the low single digits. They are spending a lot on the expansion, so the combination of those costs coupled with new restaurants taking time to reach strong operating efficiencies (it takes time for consumers to know those new locations are there), that's taking a toll on margins. Also, while ZOES likes to brag that its revenue per store is above where CMG and PNRA were at this point in their growth, if memory serves, CMG and PNRA did have better margins.
The good news is that adjusted EBITDA margins in the 9-11% range, in recent years, are pretty good. The long term goal is for that to be 20+%. Also, restaurant contribution margin in the 20% range is good to see. Contribution margin represents the portion of revenue that is not consumed by variable costs and so it contributes to the coverage of fixed costs. On a final note, the balance sheet is in good shape with very little long term debt. Pro forma long term debt is under $4 million while pro forma cash will be in the $30 million range following this offering.
Valuation
We ran a scenario generator based on where ZOES may open next week. We think it makes more sense to compare ZOES to NDLS and PBPB as they are more similar in size. As you can see, ZOES is probably reasonably priced relative to its peers if it opens at $20 or below. If it pops much beyond that, its valuation would be stretched. Although with an average revenue per store of $1.47 mln, it probably deserves to trade at somewhat of a premium as NDLS ($1.18 mln) and PBPB ($1.00 mln) do lag a bit on this metric.
Conclusion & Briefing.com Grade: A-
Overall, we are fans of ZOES. There are a lot of positives here. They are an early stage growth story with a goal of doubling their number of locations within four years and they have a long term goal of 1,600+ locations. Also, since 2008, ZOES has not moved or closed a single restaurant so the concept does seem to work. We also like the store metrics. They have posted double digit same store growth in three of the past four years and ZOES has been steadily increasing its average revenue per store which indicates to us that there is good word of mouth. We also like that they are a pretty unique concept. They are basically taking Mediterranean cuisine to the masses. Mediterranean options are typically limited to full service restaurants, so to adopt it for the fast casual market segment is pretty intriguing.
It's not an entirely clean story. The company is not yet profitable as they have been spending a lot on their aggressive expansion plans. And that's another concern. Restaurant unit growth is great to see, but it can be a mistake to expand too quickly. ZOES seems to be handling it ok thus far, but it's a bit of a concern. Another slight concern in that same store sales tailed off in 2013. After three years in the +11-12% range, it tailed off to +6.9% in 2013. Maybe expecting double digit comps every year is not realistic, but that's a metric to watch going forward. Our hope is that their aggressive expansion plans is not causing ZOES to take their eye off the ball on the current locations.
While there are a lot of positives here, investors may be a bit wary after getting burned by the Potbelly (PBPB) IPO in October 2013. Both are small, early growth stage, regional fast casual restaurant chains so many will draw a parallel. It priced at $14, opened at $28.66 and traded into the low-$30's on its first day. The stock has since been cut in half. So just be careful about chasing a pop higher.
In spite of those concerns, we think ZOES will generate a good deal of interest when it prices next week. It has a tiny float (5.8 mln shares) and it's an attractive growth story with a unique concept. The underwriters (Jefferies, Piper, Baird) are good although this is not a Goldman or Morgan Stanley deal. This is a slight negative but probably not a big deal. Overall, we think this concept has a good deal of potential.
Nice PEIX bounce correlates with the nice ethanol futures bounce today.
PEIX price appears directly driven by ethanol prices now that the big volume Momo Trading has subsided somewhat. JMHO!
Here's a link to the current futures prices. If you were to compare the PEIX chart to a futures chart, like May or June, you'd see that the reversal in ethanol prices seems to have preceded the reversal in PEIX (though PEIX got an early breakout boost from earnings in late February). In fact if you sort of filter out the earnings-related breakout for PEIX, it starts to look more like the ethanol futures chart.
This is just a loose chart observation, not a technical analysis.
http://www.cmegroup.com/trading/energy/ethanol/cbot-ethanol.html
Best Regards,
'peeker
ps> still long PEIX and hoping for an improvement in ethanol prices, which I think will take PEIX higher.
What is Keith Shaefer saying to his subscribers about PEIX here? CL seems to have reduced his PEIX recently due to the recent ethanol price downtrend.
PEIX: Ethanol supply up on increased imports.
http://www.bloomberg.com/news/2014-04-03/ethanol-falls-most-this-year-as-imports-add-to-supply.html
Ethanol Falls Most This Year as Imports Add to Supply
By Mario Parker Apr 3, 2014 12:49 PM ET
Ethanol futures fell the most since December on speculation that foreign purchases of the fuel are helping to ease supply tightness.
Prices plunged as much as 16 percent. The Energy Information Administration said yesterday that imports averaged 11,000 barrels a day last week, the first time it has reported a weekly inflow since September. Production also increased and stockpiles expanded to the highest level in three weeks. Ethanol reached $3.517 a gallon on April 1, a seven-year high.
“It’s in a free fall,” said Will Babler, a broker at Atten Babler Risk Management in Galena, Illinois. “It’s just a market stretched beyond belief and any little thing can lead to a panic.”
Denatured ethanol for April delivery, which expires today, fell 50 cents to $2.70 a gallon at 10:48 a.m. on the Chicago Board of Trade. Prices have gained 41 percent this year. The more actively traded May contract sank 12.9 cents to $2.37.
Gasoline for May delivery advanced 3.37 cents, or 1.2 percent, to $2.9005 a gallon on the New York Mercantile Exchange. The contract covers reformulated gasoline, made to blended with ethanol before delivery to filling stations.
Ethanol’s discount to gasoline, based on May contracts, expanded 16.27 cents to 53.05 cents a gallon.
Prices for the biofuel surged as winter weather clogged railroads, by which about 70 percent of ethanol is shipped, according to the Energy Department’s statistical arm.
While the agency showed imports for the first time last week since September, a separate report that it publishes monthly and says is more comprehensive shows the U.S. made foreign purchases of the additive during that time period.
Yesterday’s report showed inventories rose 1.4 percent to 15.9 million barrels, while production increased 4.2 percent to 922,000 barrels a day, the biggest gain since Jan. 17 and the highest rate since Dec. 20.
To contact the reporter on this story: Mario Parker in Chicago at mparker22@bloomberg.net
PEIX: Post it here, not on VMC Motherboard. By doing so, we can all follow the conversations and suggestions, rather than having half Wade's questions on one board and the other half on this one.
For what it's worth ...
'peeker
PS> If you believe in efficient markets, PEIX price is doing what it should based on what information is available. It seems to be a tug of war between ethanol prices (crush spread) and strong earnings report in a few weeks. Unfortunately we cannot keep ethanol price stable long enough to just get the great 1Q earnings then all head for the exit after it pops to $20 or $30 (or $40 as some dreamers have suggested.
09:47 High-Frequency Trading comments by Charles Schwab:
Charles Schwab issues statement on high-frequency trading: 'High-frequency trading is a growing cancer that needs to be addressed'
Co's Chairman Charles Schwab and President and CEO Walt Bettinger posted the following statement on high-frequency trading at Schwab.com
"Schwab serves millions of investors and has been observing the development of high-frequency trading practices over the last few years with great concern. As we noted in an opinion piece in the Wall Street Journal last summer, high-frequency trading has run amok and is corrupting our capital market system by creating an unleveled playing field for individual investors and driving the wrong incentives for our commodity and equities exchanges. The primary principle behind our markets has always been that no one should carry an unfair advantage. That simple but fundamental principle is being broken...High-frequency trading isn't providing more efficient, liquid markets; it is a technological arms race designed to pick the pockets of legitimate market participants...A simple solution would be to establish cancellation fees to discourage the practice of quote stuffing. The SEC and CFTC floated the idea last year. It has great merit. Make the fees high enough and they will eliminate high-frequency trading entirely. But if the practice is simply a scam, as we believe it is, an even better solution is to simply make it illegal. And exchanges should be neutral in the market. They should stop the practice of selling preferential access or data feeds and eliminate order types that allow high-frequency traders to jump ahead of legitimate order flow. These are all simply tools for scamming individual investors."
PEIX, ethanol futures, and California ethanol prices???
We can see PEIX price and ethanol futures prices, but they do not provide clarity to how PEIX contracts with ethanol buyers (for blending into gasoline).
Does anyone know how PEIX contracts to ethanol buyers in California? Surely it is not daily pricing to their customers, so I just wonder how PEIX actually prices their ethanol (e.g., on a monthly basis, or per 10,000 gallons, or what?
I doubt there is a way to track realtime California ethanol prices. Does anyone happen to have a link to realtime California ethanol prices?
16:49 PEIX
Pacific Ethanol disclosed amendments to credit facility and term loan arrangements to accommodate restart of production at its Madera, California ethanol production facility (17.25 -0.65)
The Credit Agreement Amendment maintains the borrowers' revolving credit facility at $15.0 million but allows the borrowers to terminate in whole or permanently reduce in part in $1.0 million increments the lenders' aggregate commitment. The lenders' aggregate commitments are no longer subject to increase. The Credit Agreement Amendment also increased to $24.0 million from $14.0 million the level of permitted indebtedness, including capital lease liabilities, that may be incurred for yield enhancing equipment or processing and separation equipment for corn oil and corn syrup at the Company's ethanol production facilities.
The Restated Credit Agreement Amendment reduces the borrowers' revolving credit facility from $35.0 million to $20.0 million while increasing the maximum amount of the term loan outstanding, allowing the borrowers to immediately borrow an additional $7.0 million. The additional $7.0 million in borrowings is subject to an original issue discount of 6.25%, representing loan fees payable to the lenders, resulting in net proceeds from the additional borrowings of approximately $6.6 million.
Read more: http://www.briefing.com/InPlayEq/InPlay/InPlay.htm#ixzz2xmpf7aHY
PEIX down with ethanol prices...
14:21
CBOT Agriculture and Ethanol/ICE Sugar Closing Prices:
May corn fell 11 cents to $4.96/bushel
May wheat fell 17 cents to $6.68/bushel
May soybeans fell 21 cents to $14.62/bushel
May ethanol fell 29 cents to $2.50/gallon
May sugar (#16 (U.S.)) rose 0.15 of a penny to 22.53 cents/lbs
12:17 Material to PEIX: Corn & Ethanol both up slightly an hour after USDA planting report:
Highlights from planting report:
Corn planted acreage down 4% from 2013
Soybean acreage Up 6%
All wheat acreage down 1%
All cotton acreage Up 7%
PEIX: How do we know they will not hedge (forward sell) their ethanol in the California market? It has been said that their bankruptcy history resulted in bank loan limitations on hedging, but it's not clear whether PEIX mgt can try to work something out to lock in higher west coast ethanol prices before they drop meaningfully.
Just thinking that the highly optimistic estimates for future earnings would be impacted by sharp drop in ethanol prices and/or any hedging that PEIX puts on.
PEIX: Looking at the chart a little differently over the last month, you could also say there has been a double top, but I prefer to be optimistic and be emboldened by the recent higher highs and higher lows (though there seem to be only two higher highs and higher lows). In that case, I definitely want it to continue higher rather than fall back to a nasty, rotten, ugly $12.5-ish.
IMHO the problem with determining what P/E ratio PEIX merits is that one cannot reliably forecast the forward P/E. In other words you cannot estimate annual P/E based on one good quarter. Fluctuations in margin due to fluctuations in ethanol and corn prices make forward P/E estimates highly theoretical.
I actually did add 1000sh today at 15.25 and 14.25, out of pure unadulterated stubbornness and surprise that REX results were not perceived as "good enough".
I agree with Bobwins that PEIX should still report good earnings in April, but that 4 weeks is looking like a long time right now. Fingers crossed that California ethanol prices remain high and PEIX breaks a dollar/share in the April report.
For the record, I think CL also added some PEIX options today, so we aren't the only ones that think unhedged PEIX is better than the others.
Ethanol stocks down due ethanol futures being down.
http://www.bloomberg.com/markets/commodities/futures/agriculture/
Wade, this is just a suggestion:
Before buying or selling ethanol stocks on a particular day, you might expect that on a day when ethanol prices are down more than corn (percentage-wise), like today, the ethanol stocks would likely fall a bit.
Observation: REX 3yr chart shows that in March 2012, the company was trading at about $34/share when they reported 4Q earnings of $1.72/sh, but thereafter the stocked dropped >40% to under $20 over the next quarter, and they earned only $.09 for the next quarter. I would assume there was an adverse change in margins (probably due to the fall of ethanol prices).
PEIX? I expect they could trade over $20/share iff they break $1/sh earnings for the current quarter, but it is NOT a sure thing, especially if the trend in ethanol prices continues down into the spring.
IMHO: REX (great quarterly earnings today) and PEIX (great quarterly earnings next month) may be getting pressured today because forward-looking commodity-sensitive investors show concern that ethanol price trend may have reversed to the downside, so the great recent margins are not a certainty going forward.
Regardless of a great quarter, commodity-sensitive investors KNOW that the recent record ethanol prices will go down over the next few months. There is also much uncertainty over future corn prices and the potential that the corn crush spread gets squeezed like a lemon.
In other words, one could explain REX and PEIX prices today with that old idiom: "the market doesn't like uncertainty".
SFY Motley Foolish article excerpt: Swift Energy is looking to divest its central Louisiana assets, and to find a joint venture partner for its Fasken natural gas assets in the Eagle Ford shale. The company is negotiating with potential partners and anticipates concluding both transactions by the end of the second quarter. Needless to say, the first step in rebuilding investor confidence is to complete both deals; getting highly favorable terms would also help greatly. Until then, investors face too many unknowns to come back, as both deals are critical to reducing the company's leverage so that it can prudently fund growth.
I actually added earlier today based on the 3 new well results.
SFY: Motley Foolish article just out suggests SFY needs to manage capex vs. liquidity.
http://www.fool.com/investing/general/2014/03/25/3-things-swift-energy-company-needs-to-do-to-win-b.aspx
I haven't looked at them closely for awhile, but I'm surprised to see that with that high production, they were not profitable last year.
They must be carrying too much debt and still be too Gassy, I guess? I think you've mentioned in past that they need to sell off their gas assets in TX to focus on oil.
PEIX down ~5%. She's lost that lovin' feelin'.
Meanwhile REX is up as it gets ready to report earnings tomorrow before the bell. However, I'd expect PEIX to move up if REX earnings are strong.
Downside risk to PEIX if market decides that ethanol (particularly in California) has peaked. That could occur as weather improves and supply by rail to California recovers.
I expect more volatility for PEIX, but their Q1 earnings report is the "event" shareholders are optimistic about, hoping PEIX pops to over $20. IMHO projecting to $4/share annual earnings based on strong Q1 earnings could (would probably) lead to disappointment as corn-ethanol spread will probably begin to trend down and remain volatile.
SFY up ~5% today with 3 successful new well tests in their Eagle Ford TX play.
http://finance.yahoo.com/news/swift-energy-announces-eagle-ford-100100264.html
IMHO ... PEIX will not make it to $40 because of fluctuations in the ethanol - corn spread over the next few months. Plus, sell in May is not far ahead (could even start before the Q1 earnings hit the tape in late April). It has had a good run, and I bought 6000sh around $11 average for my daughter and son-in-law. Took the profit in another account already.
I'll still settle for that $30 target rather than expect too much from it. We might also expect some volatility to take it down, not just up, in the weeks ahead, as big money players try to run us little fish out of the river. It has been a good long hold for a couple of months, but we have to realize the shorter term traders are now in the game. It got a strong mention from from one of the Nazarian brothers on CNBC mid-afternoon today.
Good luck to all PEIX longs though! Heck, I celebrated a little bit with ethanol tonite myself.
'peeker
OT: ... kaBOOM! ...especially on your elevator ...
Beware: China's housing bubble could go "kaboom".
http://www.telegraph.co.uk/finance/china-business/10703990/Looming-property-default-in-China-raises-fears-of-broader-crisis.html
13:58 Headlines from John Kerry that the US supports exporting LNG to various nations
Makes me wonder if exporting ethanol and crude is far behind?
PEIX; now the peeps are saying it could go to $40? fugetaboudit!
It will continue to be volatile based on ethanol and corn prices. Keep in mind that the market likes to look 6 months ahead, and the market doesn't like uncertainty, so the all-important "spread" uncertainty is built into the price. IMHO it should be treated as a commodity stock (fluctuating with the spread on a day-to-day basis) and as an event stock nearer-term (based on optimism about Q1 profitability). There's also no assurance earnings will reach $4/sh this year as more warrants can be exercised throughout the year.
IMHO it is doubtful PEIX will drop back below $10 (but could with a narrowing spread), yet it seems totally outrageous to think it goes to $40 without 3-4 quarters of blowout earnings (due widening spread). Keep in mind that PEIX could eventually hedge a bit, reducing volatility thereafter, like REX and GPRE have done.
Disclosure: I am long PEIX stock with a target of about $20/share in April after Q1 earnings. I hold no options, as I've gotten caught being overly optimistic (particularly via call options) many times before.
BHRT popped and dropped in a bioheartbeat!
PLUG: Could it pop like a Dot-Com Bubble?
This guy thinks so.
http://seekingalpha.com/article/2075013-pulling-the-plug-on-the-fuel-cell-mania?isDirectRoadblock=false&source=email_rt_article_readmore&app=1&uprof=5
PLUG: Share offering indicates they are too lazy to go to the bank or think their shares are overpriced. Congratulations to you on your owning KNDI and PLUG, however.