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Non-Tech : ZOLT
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To: flyguy who wrote (43)11/16/1996 4:23:00 PM
From: Tulvio Durand   of 970
 
You bring up some good points. I plan to place a call next week sometime and will let you know what I find out.

Today's IBD (dated 11/18/96) stated the following on page A25:

> "Zoltek Cos. climbed 3 1/2 to 32 on triple its average volume. Fiscal fourth-quarter profit leapt 220% to 16 cents a share - 5 cents more than forecast - on 440% higher sales. The company is a low-cost leader in the manufacture of carbon fiber, used in products ranging from aircraft brakes to golf clubs.<

>"Zoltek has opened new markets by cutting the cost of fiber fabrication to about $8 a pound from $30. Profit growth has accelerated from 33% to 67% to 125% to 125% to 200% to 220% over the past six qurters...<

So, based on recent Q-Q performance, their earnings are growing at a compound rate >1500% Y-Y. It seem reasonable to me that ZOLT should be selling at PE of 100+ or at least $65/sh right now. The stock is a steal, IMO.

Recall that the reason for issuing 2M more shares is to increase production to 17 lines from the present single production line. When this capacity starts coming on sometimes next year, earnings should keep on accelerating. At some point competition may come in -- who knows when. But right now, I believe Zoltek is the only one able to produce carbon fiber at $8/lb., and selling all it can produce.

Regards,

Tulvio
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