I'm a big fan of the stock market. I enjoy following its movement, the stories behind the companies, and the people involved. I'm not sure what has made me the avid stock fiend that I am today, but I thought its a combination of a love of numbers, money, and suspense. The stock market has all of these bundled into one happy little 6 and a half hour session, typically five days out of every week.For more esteemed reasons, I enjoy partaking in the stock market because it keeps me informed as to the pulse of the American economy. The American economy is a significant, if not the most significant player in the whole world when it comes to the economy. The stock market is a barometer of where America's economy is and by virtue of its power and enormity, where the rest of the world's economy is likely to head.
These are all fascinating things. I also find the ways in which stocks are picked just marvelous. There are two particularly different trains of thought that I'm aware of. The first is fundamental analysis, in which stock brokers and institutional investors (you know, the guys who all had to writedown billions upon billions of dollars in wake of the sub-prime mortgage crisis, which I read totaled a whopping 12 trillion dollars (92% of US GDP)) look at financial data for publicly traded companies and make judgments based on the current economic climate.
They take factors like the balance sheet and income statement into account, as well as, management practices. I'm a huge proponent of looking at management practices. I believe that with the right team and suitable actors in the correct places, a capable management team can make even the most desperate company rise from the depths.
Anyway, another way to look at stocks is through the lens of technical analysis which emphasizes the stocks historical data as it relates to price and makes its judgments based on these metrics. I've always loved deciphering charts and trying to gain a further understanding of them especially for various stocks in the market.
Recently, I've become enthralled with a particular type of technical analysis called Point and Figure Charting, which you can read about on Those Answers Inc. website. The main idea behind it is that it charts the price movement of the stock in terms of supply and demand, the main driver underlying all economic thought. Simply by creating a vertical column of X's or O's, a tremendous deal of information can be gathered about the buying or selling habits of a particular stock.
Another nice feature about it is that it doesn't take time into effect, which can often distort the movement of stocks. On the surface, Point and Figure Charting may look very simple, but there is a tremendous amount to it that has fascinated me and led me to one of the best looking and most promising stocks I can see available at the moment.
- Syntroleum (SYNM)
In a nutshell, Syntroleum has developed a new and special technology that is capable of creating diesel fuel using fat. This means, that instead of using corn to make ethanol gas, which ends up hurting us either way because then it makes corn really expensive, we can use the stuff we don't even want in the first place, fat, to make fuel through this incredibly innovative and breakthrough technology.I have never felt a stronger buy in my entire life. I first saw this stock when it was wallowing in the sub $1 range, almost being thrown off of the NASDAQ, because it just couldn't keep up with regulations. Since then it has returned in excess of 400%. It is currently at $2.24 a share and shows me no signs of slowing down whatsoever.
Let's get back to the process though. They make diesel fuel. This is spectacular for several reasons. First, the price of diesel fuel, along with petroleum, has skyrocketed recently (I believe the price of diesel fuel has actually outpaced petroleum percetage-wise). This spike in prices has begun a paradigm shift to move away from oil and to some sort of alternative energy.
Last summer, the push to alternative energy happened with solar energy. Companies like First Solar (FSLR) grew impressively. Their stock is now trading above $200, up from around $5 early last year. Different alternative energies are getting their shots, its just a matter of picking the right company. There are several other solar energy companies that did not see the massive gains that First Solar did (however, they were still sizable).
With these high oil prices and no one really knowing when they will ever come down, alternative energy, especially that which produces diesel fuel, is ripe for investing. People want to believe in an alternative energy source, and Syntroleum seems to continually have the answer.
For instance, their Bio-Synfining Technology needs fatty acids in order to occur. So, Syntroleum has recently struck a partnership with Tyson Chicken, the largest chicken farm in the World (#88 on the Fortune 500 List), to use all of their chicken fat. Not only does Syntroleum have the greatest supply of fat on the planet, but it is an unending supply.
Chicken fat, or any sort of animal fat, is completely renewable. There is no end to how much of this stuff we can use, and for the most part, there aren't many other uses for chicken or animal fat, so this takes something worthless and makes it pure profit. Pure genious really.But heres where things really get good. Syntroleum and Tyson, their joint-venture called Dynamic Fuels LLC, just received $100 Million worth of GO Zone Bonds. GO stands for Gulf Opportunity, and is a program that was established post hurricane Katrina by the State of Louisiana. The bonds are tax exempt are meant to promote investment in the area.
In late June, Dynamic Fuels LLC was approved for $100 Million, the maximum amount paid out in the program. Their plan is to build a synthetic fuel facility in Geismar, Louisana by 2010.
This was well received by Jeff Bigger, Senior Vice President of Business Development at Syntroleum, "We thank the Bond Commission for their decision to approve this application. Their timely action enables us to maintain our project schedule, creating new domestic fuel production capacity, high-quality operations and technical jobs, with initial production planned for early 2010.”
Everything is going absolutely right for this company. What's more is that now that it's above $2, stock brokers are legally allowed by the SEC to promote this stock to investors which will drive the price up as demand increases. As the price goes up, mutual fund managers will want to add this stock to their portfolios, and several institutional investors have already added Syntroleum, Goldman Sachs, Vanguard, Scott and Stringfellow Financial, etc.
On July 22nd, 2008, Syntroleum plans on holding a conference call for investors to discuss all the positive news that has been circulating around this company of only 24 employees. They will probably make reference to the GO Zone Bonds, Dynamic Fuels LLC, their joint-venture, and the approval of their synthetic fuel plant in Geismar, Louisana.
Syntroleum seem to be on the right track. They've got the capital they need, they have a mammoth partner on who to piggyback, an original technology that makes one of the most sought after commodities, and plans to build a facility in which all of this wonderful Bio-Synfining can occur. All this company spells out to me is growth and profits, over and over.
- Conclusion
What's more, the economic climate is just right at the moment. Oil prices are surging. People are looking for alternative ways to create energy and seeking out those that are the wisest investments.
Syntroleum has taken the necessary steps to get them to where they are, and I feel as though they will continue to meet and exceed the market's expectations.
If stock price is indeed the perceived future valuation of a company, Syntroleum truly has no limit. Happy investing!
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