The RTEK $1M question!
Can anyone provide some insight as to why, and when the pps could start to rise?
The above was posted over on the RB yesterday. The following is my response.
The good news: I am of the opinion that RTEK is well positioned to take advantage of the exploding CR industry. And most importantly the higher profit margin very clean CR market. I say this because the efficiency of the recently installed Granulator will allow RTI to underprice and dominate the clean CR competition. Without a Granulator CR manufacturers must be process (run CR thru a cracker mill)several times to produce very clean CR.
Take note, RTI has the only Granulator in the entire U.S. and the only Rasper west of the Mississippi.
For this reason RTEK should continue to increase CR revenues and gross operating margins into the coming years. In addition I am of the opinion that we could hear positive news concerning the sandpit operations before the end of this year. If so, the sand pit press release alone could put RTEK under the spotlight again.
Now the bad news: In my opinion the primary reason RTEK's pps has trended down is that the baby has been thrown out with the bathwater. In other words the OTC market as a whole has been downtrending for the last 12 to 18 months and RTEK has been a victim of the vacuum. Others feel that RTEK's pps downtrend is the result of increases in debt and outstanding shares incurred to acquire the above mentioned leading edge equipment. While certainly this factors in, I feel it's to a lesser degree because the SEC filings show that the revenues, gross operating margins and asset value of RTEK have significantly outpaced the share dilution and debt.
In summary, I feel that RTEK will soon dominate the clean crumb rubber industry but is presently severely oversold as a result of the overall OTC market downtrend. And while many of the so called experts say the markets have bottomed but may continue to trend sideways into the middle of next year. I feel that if RTI releases operations scheduling info on the sandpit in the near future we may never again see a better buying opportunity than the present.
razr
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