Largely opinion.
Nick,
Shucks, I wanted my wish fulfilled this Christmas, that being a significant retracement toward the $10-11 range...why wait for 2005? Perhaps you are uncomfortable predicting higher prices in the near term, unsure, not willing to speculate. Neither am I. Technically, the stock is in bad shape. Regardless of who's selling, the demand for the shares, like we saw earlier in the year, simply isn't there...here.
Lots of debt...regardless of the fact that it's non-recourse, no doubt scares many off, especially since interest rates have been rising. 12% on that last loan. The company is moving from a developmental stage to a production stage. Valuations will correspondingly change, with greater weight being placed on production criteria. Getting Riverside running demonstrated the company's ability to get that far. That was a significant accomplishment, but incomplete, the goal of profitable production still lying somewhere in the future.
Cash flow from operations, sufficient to service the debt load and provide working capital is critical. It's early yet. Riverside, the last I heard, was running in the 60% range, producing only standard board. So we'll see some revenues from that operation in Q4, maybe a trace amount in Q3. That report should appear before month's end. I seriously doubt that revenues will be anywhere close to breakeven for a couple quarters yet, maybe three...hopefully not more. Impact Capital's projections, even the conservative scenario, is too optimistic. $22+ million in revenues in FY99? Sounds good but no way, not when six month revenues totaled $1.2 million. I reckon that reality might lag those projections by about a year. So the street, which got caught up in the excitement of Riverside's startup and the biocomposite project, has been more patient in buying these last few months. IMO, next year is when the stock will make a solid move, provided the ramp-ups at Riverside and Elkhart go smoothly, and begin to show that they can throw off some cash. Personally, I look forward to the validation of the business model, otherwise I wouldn't be in the stock. My expectations got ahead of the game but I haven't lost confidence in the enterprise's ability to be very successful. Patience, patience, patience...and vigilance, of course.
2005? Surely we won't have to wait that long. I believe Elkhart is going to pleasantly surprise investors and I see that surprise as a catalyst that will provide support for the stock over the next few months. News regarding the financing and developmental plans for kenaf paper, MDF in Amsterdam, and MDF in Chicago should be forthcoming shortly. And Lackawanna startup is due in the first half of next year. Then there's Fortra...by the numbers, not proving itself yet, but maybe next year. I would be surprised if if we didn't hear about plans for additional biocomposite capacity next year as well.
All just my opinion of course. Thanks for your input. Keep it up.
Greg |
