Rentech: Increased Forecast, Upcoming Conferences Present Buying Opportunity

Apr.14.11 | About: Rentech, Inc (RTK)
Below is a brief update for investors in Rentech (NYSEMKT:RTK). The stock offers investors more upside reward than downside risk. The company has recently seen its stock price sell off from the $1.30 area, thus creating a buying opportunity for investors.

Rentech recently gave investors exciting news that isn't reflected in the current stock price of $1.18. On April 5, Rentech increased its forecast for its fertilizer segment by 25%. Per the press release,

Rentech has increased its projection of EBITDA for fiscal year 2011 for its wholly-owned nitrogen fertilizer subsidiary, Rentech Energy Midwest Corporation, to approximately $75M from the previous projection of at least $60M. REMC, which is favorably located near its customers in the corn-belt region, is benefiting from continuing strong fertilizer demand and pricing as well as low input costs. As of March 31, 2011, REMC has delivered, or signed contracts with fixed prices for the sale of, more than 75% of REMC's forecasted deliveries for the fiscal year that will end September 30, and has already purchased or contracted at fixed prices for the natural gas required to produce that product. Rentech has also increased its projection of REMC’s operating income for fiscal year 2011 to approximately $65M from the previous forecast of at least $50M."

D. Hunt Ramsbottom, President and CEO of Rentech, stated,

We are pleased that REMC’s performance is exceeding our expectations. The cash flow generated at our fertilizer facility helps support our alternative energy business, providing investors with the unique opportunity to invest in two very dynamic industries, both of which have significant growth potential.

Given that the company raising its earnings estimates, it is likely that Rentech will see an analyst upgrade in the near future.

Description

Rentech, Inc. (Rentech) is a provider of clean energy solutions. The company owns and operates a nitrogen fertilizer plant in East Dubuque, Illinois, that manufactures and sells natural gas-based nitrogen fertilizer products within the corn-belt region in the United States. It is developing energy projects to produce certified synthetic fuels and electric power from carbon-containing materials, such as biomass, waste and fossil resources. Its technologies can produce synthesis gas (syngas) from biomass and waste materials, and convert syngas from its own or other gasification technologies into complex hydrocarbons (the Rentech Process) that are then upgraded into fuels using refining technology that it licenses. In addition to developing projects using these technologies, it is pursuing the licensing of its technologies to developers of projects that are expected to produce fuels and/or power

For a more in depth description read my prior articles on Rentech.

Rentech could see a positive stock price reaction after the following conferences scheduled for April 2011:

  • April 13, 2011

SAE 2011 World Congress

Charging Forward on Petroleum Alternatives

Detroit, MI

Presenter and panelist: Dr. Harold Wright, Senior Vice President & Chief Technology Officer

Speaking Time: 10:30 a.m. EDT

  • April 18-19, 2011

5th Annual Aboriginal Energy Conference

Toronto, Ontario

Attendees and conference sponsors: Doug Miller, EVP of Project Development, and Chris Amey, Director of Project Development

April 21, 2011

Advanced Biofuels Leadership Conference

Washington, D.C.

Presenter: Hunt Ramsbottom, President and CEO

Speaking Time: 12:30 p.m. EDT (Presentation)

Rentech should already be in the $1.50 range given its prospects. The chart technicals are now showing the start of a bullish new uptrend on the 1 month daily chart. The moneyflow indicator along with the MACD indicator are showing a bullish reversal pattern. And, I still believe the stock has the potential of being a $2 to $3 stock this year.

Disclosure: I am long RTK.