aatkinson,
I've not seen anything more recent, and noticed that Zack's contains only one analyst opinion. I am wondering whether one of the companies has dropped coverage.
IMO, some of the market projections are a touch on the optimistic side. From my experience developing new markets seldom occurs this quickly, in the materials related area. The main problem that I see, is that many of the applications are not new, that is, ZOLT fibers will be competing to displace other materials in an existing product. This is often complicated by the "if it ain't broke, don't fix it" attitude.
My second concern is that there is very little to keep others from competing with Zoltek, should these markets develop. That is, barriers to competition are low, technical and financial.
Third, Zoltek is talking about selling into mainly construction (i.e., cyclical) markets. Check out P/E's for companies like Owens-Corning, they are typically 8 to 10. Then, figure out what type of EPS Zoltek might have at maturity. Finally assign a PE of 10, and see how much upside you have from here.
Finally, check actual transaction prices of CF businesses which have occurred lately. They go for 1.2x sales (see Flyguy's post).
So, for a value investor like me, the risks outweigh the rewards. I prefer to buy growth at a discount vs. a premium.
Good luck,
Todd |
