Bill/Flyguy.
Very interesting post. Thanks.
I am now neutral with respect to Zoltek stock. As, I mentioned in an earlier post, I sold last Fall. Mature industrial materials companies currently sell at PE's of 10 or so, and price to sales ratios of less than one. Now, if you look at the present market cap, and assume $5/lb of fiber, Zoltek would need to be producing about 100 Mlbs of fiber to get to a price to sales of 1. At the end of 1998, they will have less than 20 Mlbs of capacity. I decided that there was a reasonable liklihood that the investment would be dead money. But, I am very pleased with my investment in Zoltek, as I feel that it paid off early.
A second reference point would be how the current valuation compares with other business transfers (e.g., Hercules CF business to Hexcel).
My recollection is that SGL just bought RK fibers for 1 to 2x sales.
Flyguy, any ideas on what the going rate for CF businesses is? Would be surprised if it is 10x sales, which ZOLT currently goes for.
All this said, I would be very hesitant to short the stock. Seems like there is too much risk of a short squeeze, as the liquidity is still a bit on the low side. Did the people at the investment conference have anything to say on this?
Thanks.
Todd |
