Rentech Is Ready to Rally

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 |  Includes: CPST, ESLRQ, HON, RTK
by: Jeremy Richards

Rentech (NASDAQ:RTK), a beaten down energy company, is trading at just $1.05. RTK stock could very well see some serious upside percentage gains over the near term. I can't find any reason why RTK should be trading at such a low price. My one month by daily chart program alerted a new buy trend on RTK with large money flow moving in at $1.05. This suggests a move back to the 50 Day moving average of $1.16 Area. RTK should test the 200 Day moving average of $1.47 over the next several months which represents almost 50% upside reward for new investors.

RTK is expected to see new investment buy interest this month as it has scheduled 6 nationwide power point presentations and web-casts promoting its unique clean energy solutions.

The potential growth prospects are huge for RTK.

On January 15, 2010
Brean Murray initiated coverage on Rentech with a Buy. Price target $2.50.

Brean's analyst said:

We believe that RTK's strategy is truly unique among clean tech names, and it ultimately puts the company in a strong position to advance its synthetic fuels platform...

Zack's recently noted: Under the American Reinvestment and Recovery Act (ARRA) passed in February 2009, the U.S. Treasury Department has implemented a program to issue cash grants in lieu of investment tax credit for renewable energy projects. Recent focus on renewable sources will greatly benefit green crusader companies like RTK.

RTK provides clean energy solutions. The Company’s Rentech-SilvaGas biomass gasification process can convert multiple biomass feedstocks into synthesis gas (syngas) for production of renewable fuels and power. Combining the gasification process with RTK’s unique application of proven syngas conditioning and clean-up technology and the patented Rentech Process based on Fischer-Tropsch chemistry, RTK offers an integrated solution for production of synthetic fuels from biomass.

The Rentech Process can also convert syngas from fossil resources into ultra-clean synthetic jet and diesel fuels, specialty waxes and chemicals. Final product upgrading is provided under an alliance with UOP, a Honeywell (NYSE:HON) company. RTK develops projects and licenses these technologies for application in synthetic fuels and power facilities worldwide. RTK Energy Midwest Corporation, the Company’s wholly-owned subsidiary, manufactures and sells nitrogen fertilizer products including ammonia, urea ammonia nitrate, urea granule, and urea solution in the corn-belt region of the central United States.

RTK has been recognized by Biofuels Digest as one of the 50 Hottest Companies in Bio-energy.

This week I changed positions in 2 energy stocks: I closed out a long position in Evergreen Solar (ESLR) after Barclays downgraded them from equalweight to underweight, price target from $1.50 to $0.50. I sold 75% of my Capstone Turbine (NASDAQ:CPST) holdings after a bounce to $1.20 from $1.05 bottom last week. I am glad I found RTK to invest the cash raised from CPST and ESLR and excited about starting a long position. I will use a 10% trailing stoploss on 1/2 my position.

Disclosure: Starting long position in RTK, Sold out of ESLR. Long CPST.