... and almost tripled in one week. For weeks I was wondering why RTK had been performing so poorly during the six months when the broad market recovered nicely and its long time competitor Syntroleum has been up almost 300% during the same period. RTK was $2.4 prior to the financial crisis and, even with the tripling of share price last week, it still sits at $1.32.
The trigger for today's surge - with 37m shares of the 164m float traded today- was the blow-out earning of $0.22 per share due to its successful nitrogen business. It happens to be the first earning report ever for this company. The Company gave strong guidance for the rest of 2009 and beyond.
I've followed SYNM and RTK for years. I think this will finally become the pivotal year for both of them, in that they both turned from a concept (FT-based processes), money-losing company to a real incoming generating companies. SYNM is doing this by selling technologies and working with Tyson Foods and Sinopec, while RTK is making real money by applying its FT technologies and processes to the making of fertilizer. Both has the long-term potential of supplying syn-diesel to the military and civil airline fleets. Unless the oil tanks again, both should do well. SYNM is probably still preferred because of (1) starting of production in its BioFuel plant in 6 months; (2) For CTL/GTL/Biofuel, the Co has gone beyond the stage of "demonstration plant" and moved into scale applications while RTK has done more in the gas-to-fertilizer business; (3) Sinopec is such a heavy-weight; and (4) RTK has more than twice of the share counts than SYNM.
On the other hand, RTK's income is more stable. They have the real possibility of making $1 per year, which would lead to a forward P/E of only 1.32! SYNM has more upside in 2010, but its quarterly income is not as stable. It may actually lose money in some quarters (as it did in Q2). Also there is always risk of delay or even failure for the BioFuel plant being built. One more thought, RTK may decide to have an IPO of its REMC plant (just like what CDC did for its software business last week).
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P.S.: This development still leaves me confused: How come the market completely missed the blow-out earning despite of the general good market, RTK's stable business for quarters and the well-documented low natural gas price, RTK plant's main feedstock? Does this demonstrate that the market is very inefficient? Or just the opposite?!
One theory I can come up with is that some investors may have been doing the hedging between SYNM and RTK. With SYNM favored (having more visibility) and both are high risk play, people could have been buying SYNM and shorting RTK in the same time, thus depressing RTK's share price for months. Just a guess.
