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...

Fueling The Winds Of Change With Zoltek

First of all, I just want to say that the market has been very hard to take the past month or two. What you need to remember, is that we are in it for the long haul. If you are an investor that thinks long-term, you should be drooling over all of the values out there in the market today. Even with an "economic slow down" here in the states, it really doesn't change the global growth stories of plenty of companies out there today.

For instance, Intel just reported today only 2 cents under estimates yet it is hammered in after hours. The market is overreacting and focusing on any negative news, without even considering a tomorrow. Now is the time to be concentrating on the future, a long term investor needs to be ready to buy at these moments, not panic like some many people tend to do.

That being said, my next long term pick is the carbon fiber producer Zoltek (zolt). This company is the leading producer of the carbon fibers that go into producing wind turbines, a growing source of green energy. This relatively small company (1.26 Billion Market Cap), has signed long term supply contracts with the top manufactures of wind turbines in the entire world! Gamesa Group of Spain, DeWind and the world's largest producer Vestas Wind System will be begin to be reflected in Zoltek's bottom line very soon.

In case you missed the figures wind energy is projected to grow at 25% per year worldwide, and I personally think this is a pretty conservative estimate. As I stated earlier with Evergreen Solar and Ormat Technologies, green energy is going to become the next multi-year bull market.

Zoltek is in one of the sweet spots, and appears to have a near monopoly on a key area of this growing trend. Their revenues have been growing at a very impressive rate and should only continue to do so with it's recent announcement that it had purchased the Guadalajara, Mexico-based Crysel Acrylic Fiber.

As if that weren't enough reason to own Zoltek, they also have the potential to be huge in the automotive market as their light weight carbon fiber could easily be used in the manufacturing of more fuel efficient vehicles. Think about it, the government is just beginning it's push to increase fuel standards, and as oil rises the process will only speed up.

Yeah the market is pretty bearish right now, but there is always plenty of companies to pick up on sale at this level. Always, don't buy all at once and focus long-term... as with all things, this will pass...