Replies to post #63 on Vertex Energy Inc (fka VTNRQ)

[Belek]

Why I Like Vertex Energy (VTNR) Despite The Warning Signs

(Courtesy Oil & energy Insider Weekly Report-June 20.2014)
Some technologies, even some industries, seem to be always on the verge of a breakthrough. The energy sector is particularly prone to this. If you believe the hype, then we are always about to experience some fundamental shift that will change our lives forever, and if you just buy in to one of the struggling companies seeking to exploit this wonderful new technology, you too can be fabulously wealthy! The truth in these predictions, at least to date, can best be gauged by the fact that Exxon Mobil (XOM) made $9.1 Billion in the first quarter of 2014.

For that reason I hesitate to talk positively about a stock in one of those industries that we have probably all been told are “revolutionary”. This is especially true when the stock is extremely volatile and is on the way back down after nearly tripling in a three and a half month period. While we are on reasons not to trust this thing, how about a market cap of less than $220 Million, or a recent dilution of the stock by a $17.1 Million private placement of shares that caused a one day 14% drop.

All of these negatives apply to Vertex Energy (VTNR) but I still like it. Vertex is in the oil re-refining business. They provide recycling solutions to businesses and take used oil and other waste products and make them into something useful. The green nature of this business makes it a candidate for over hype, and I for one have been told before that re-cycling industrial waste is the next big thing, but there are three things that make this different.

Firstly, this is not a case of buying into an idea in the (probably forlorn) hope that the company will one day make money. Vertex has turned a profit in every quarter since the beginning of 2010 except one, and that was a break even quarter.

Secondly, the recent price rise, as spectacular as it has been, has been based on valuation, not speculation. Indeed, by conventional valuation metrics, VTNR is actually cheap at current levels, with a forward P/E below 14.

Finally, the company’s purchase of Omega Holdings, another re-refining company, in March of this year has expanded their capacity and paves the way for further significant earnings growth.

The biggest problem with buying into a volatile stock like this on the way down is timing an entry. It is all too easy to buy in for long term potential but then be squeezed out within a few days or weeks. Thursday’s close at $9.74, however, is close enough to a significant level to make buying here a reasonable bet.



The $9.15 level (marked on the above chart by the gold horizontal line) offered resistance twice on the way up, both at the end of April and then a week and a half later. As you would expect, once it was broken it became a support level and has held twice on the way back down. It will likely provide some support again if today’s drop continues. It is too close for a stop-loss level in a stock with this much recent volatility though, and the May low around $7 would be more appropriate. Obviously, this means risking over 30% of your investment, so this is not something on which to risk a chunk of your capital.

Given the current valuation, just a return to average earnings multiples would give close to a 50% profit, so the risk/reward ratio is not too far off, but the real potential is for serious earnings growth over the next couple of quarters and some upward revisions. If that happens, or the seemingly re-invigorated EPA further tightens regulations for disposal of industrial waste, there could still be serious pop in the stock that would allow stop losses to be re-set in order to lock in a profit.

Generally I don’t like trendy stock and prefer to look for something that is out of favor and is therefore cheap, but value is value. There are reasons not to buy VTNR, but to my mind the opportunity to own a company that has a proven profit record, is trading at a discount to the broad market, and has serious growth potential is just too good to miss.
http://oilprice.com/

[Belek]

looks like VTNR ready for next leg up,,,jmo

[Belek]

Vertex Energy, Inc. (NASDAQ: VTNR), an environmental services company that recycles industrial waste streams and off-specification commercial chemical products, announced today that its common stock will be included in the Russell 3000®, Russell 2000®, and Russell Global Indexes, along with other indices, after the reconstitution of Russell Investment Group's family of US Indexes which was completed on June 30, 2014 as described on www.russell.com/indexes.

Membership in the Russell Global Index, which remains in place for one year, means automatic inclusion in the appropriate large-cap, small-cap, all-cap indexes as well as the applicable style, sector and country indexes. The Russell Global Index represents the investable global equity market and its segments comprehensively. It consists of more than 10,000 securities in 47 countries and offers over 300 key subindexes. Consistent with the design of the family of Russell U.S. Equity Indexes, it is constructed using float-adjusted market capitalization weights and represents 98% of the investable global equity market. Russell produces a family of market cap-weighted U.S. equity indexes. All U.S. indexes are subsets of the Russell 3000® Index, which represents approximately 99% of the U.S. equity market. The Russell 2000 Index is a subset of the Russell 3000 Index and represents approximately 10% of the total market capitalization of the Russell 3000. It includes approximately 2000 small-cap companies based on a combination of their market cap and current index membership.

Benjamin Cowart, Chairman and CEO, of Vertex Energy, Inc., stated, "We are pleased with the addition of Vertex Energy, Inc. into the Russell Indexes. This addition will further enhance the visibility of the Vertex story, and we anticipate increased liquidity and broader exposure to institutional investors as a result of such addition. We believe that recent decisions, including the acquisition of Omega Holdings and a capital raise of $17.1 million, will grow our market presence and increase our long-term financial performance. We are delighted with achieving this great milestone in our history."

[Belek]

nobody here, better for me, back up the truck,,,,target $15/share