I've been wondering for a while how "Mad Cow" risk might be played. There seems to be increasing awareness that feed practices using byproducts of an animal's own species as feed, might increase the risk of this disease entering our food supply. While I think the risk is small, I can't eliminate it. And it can certainly be seen as a hot button.
One thought is that demand might grow for alternate animal feeds. There might be some room for marketing chickens, for instance, that can advertise they weren't fed chicken feathers (which in itself isn't very appetizing).
A company I've run across is Omega Protein, a 60% owned subsidiary of Zapata. OME catches menhaden, a real junk fish related to herring, and then processes it in its own plants into animal feed, fish oil and fertilizer. The 40% was IPO'd last year, partly on the image of Omega-3, a desireable fat apparently, that is present in the fish oil. It was just in 1997 that the processed fish products were approved for human consumption, improving the potential demand.
OME is selling at about 5 5/8, has about $2 per share cash, a trailing PE of 5.6x, although 1999 earnings will likely be somewhat lower than 1998's. The company is much the gorilla in the "fish oil" market, but much of the demand is directly competitive with other oils, such as canola, etc. Float is 8.5 mm shares, 79k shares traded daily.
Other statistics:
ROA 13.88%
ROE 18.84%
P/Bk 0.87
P/S 1.03
Oh, also a kicker--Zapata might decide it wants to cash out of non-internet related investments and sell the company to a third party. (Maybe Warren Buffett would be interested).
Any comments?
I like your "personal" thread here. I'm surprised there aren't at least a few people interested in this sector. Strange.
JS |
