Tuesday, February 12, 2008

Zoltek Hits A Speed Bump

Zoltek (ZOLT) reported it's earnings yesterday that dissapointed some investors. Zoltek's net sales for the quarter totaled $40.1 million, compared to $30.3 million in the first quarter of fiscal 2007 and to $43.6 million in the fourth quarter of fiscal 2007. Zoltek's net income was $2.6 million in the first quarter of fiscal 2008, which compared to net losses of $5.7 million and $1.8 million reported for the first and fourth quarters of fiscal 2007.

Zsolt Rumy, Zoltek's Chairman and Chief Executive Officer, said that although management had expected sales in the recent quarter to approximate the level reported for the immediately preceding quarter, volume was constrained by customer plant shutdowns in Europe over the holiday season and by year-end inventory adjustments by several customers who previously had built up their inventories to address concerns regarding possible shortages. "With our increasing capacity, our customers are more confident that we will be able to supply all their requirements and, consequently, they worked down some safety stocks. Overall demand for our low-cost, high-performance carbon fibers remains strong and we are optimistic that we can reach our sales objective for fiscal 2008," Rumy said.

As a long term investor you need to ask yourself if the overall story has changed. Is this just a hick-up along the way? Don't forget it was a tough quarter for a lot of companies out there with the slow down here in The States. Zoltek still has deals with the largest wind turbine manufactures in the world, and wind energy should only continue to grow in the future. Zoltek is also a smaller company which will lead to these massive stock swings in one direction or the other. Given these facts I think that this situation is presenting us with a buying opportunity.

Remember, as a long term investor you can buy a certain stock over and over again to lower your cost basis. You can always add to your position on dips in most stocks out there. These stocks that are mentioned in this blog are not 1 month stocks, they are not even 6 months stocks. Each one I plan on holding for at least a year or more depending on if the reasons I bought the stock in the first place has changed.

You need to do this same thing when you see your stock take a dive like Zoltek did today. Sometimes panic selling creates the best buying opportunities... Look at Google, it is bouncing off it's low, and should continue to rise as it has just become too cheap, especially with Microsoft's offer to buy Yahoo.

I guess it all depends if you see the glass half empty or half full...


  1. hum, good points but zolt has continued to tank, down to 22 now, when will it turn around? how long will it take to recover the 30% or whatever it dropped in the past few weeks?

    in regards to googled, the bounce back was short lived, its down to 460 or so after being around 500 at the time of the original post here.

  2. Zoltek is a long term investment just like all the other stocks that I highlight on this site.

    I am happy to see Zoltek continue to tank... well of course not, but I do see it as a buying opportunity. The federal reserve is going to continue to cut interest rates which will cause all the banks and mortgage companies to be able to offer cheaper rates to their customers. There will be a wave of refinancing and the economy will get back on track again.

    Don't forget our economy does go in cycles and the fed has a major part in this. So when will Zoltek recover? Well it will probably start at the next fed meeting when they cut rates again... the same goes for Google, although I think they are even more of a buy then Zoltek as these levels.

    I hope this helps, as long as you have a long term view on things you should be fine.... I know I have been using this weakness to pick up plenty of bargins that are out there.... eventually the numbers that these companies are putting out will make a difference... not just the negative investor attitude that is out there right now.

    Good luck to you anonymous...