I like this stock it's fertilizer which may be played out now- check this nicely detailed piece by stockmaster Cheshier whoever he is... the damn chart looks fine though- perfect time to buy-
Converted Organics Inc. (COIN) is a development-stage business seeking to use organic food waste as raw material to produce all-natural soil products combining both disease suppression and nutrition characteristics. The Company's process, which has been demonstrated in a pilot manufacturing facility, uses heat and bacteria to transform food waste into a high-value natural fertilizer.
The Company's initial facility is located in northern New Jersey, providing access for the delivery of feedstock from throughout this geographic area. The facility is within a special recycling zone and has been approved for inclusion in the Middlesex County New Jersey Solid Waste Management Plan.
Converted Organics recently hit the big-time, running from $2.25 a share all the way up to $14.14 a share in the last 52 weeks, before settling at just below $10 now. So why have shares gone up 300% in the last year you ask? There is good reason: COIN Logo
According to their last webcast, in the second quarter of 2008 their Woodbridge facility will be converting organic food waste to their all-natural fertilizer at the rate of 250 tons a day. That will bring in approximately $52,500 in revenue per day. There are 90 days in a quarter so they will have $4,725,000 in revenue per quarter. 40% covers cost of conversion so that leaves them with $2,835,000 in operating profit. Subtract an estimate of $1 Million in Selling and Administration expenses and that leaves $1.8 MM profit per quarter. With 4.23 million shares that means $.40 in earnings per quarter. And that's with one plant at half capacity. The plant at full capacity will convert 500 tons per day which means $.80 EPS per quarter OR $3.20 Per Year.
That sounds really good right? Well⦠almost too good in my opinion. After years of reading prospectuses, quarterly earnings reports, and press releases, Iâve become a bit skeptical. Especially from a company that hasnât made a dime â literally. Donât take my word for it, check out their financials:
Then thereâs the âDividendâ. Every Quarter, COIN pays out a quarterly common stock dividend of one (1) share of common stock for each twenty (20) shares of common stock outstanding, payable to all holders of record of the common stock.
I have to admit, I like the idea. Especially at current price levels.
The problem is that the number of outstanding shares will increase from 4.23 million to 5.14 million in the next year, which means the numbers I mentioned before are completely skewed. As they continue their dividend, further dilution will occur.
Kind of sounds like a pyramid scheme, doesnât it?
Pyramid Scheme
Something about this company turns a siren on in my head. But I could be wrong â anything Organic is popular these days, and maybe they can beat the odds and compete against large, established fertilizer companies that actually have revenue.
You be the judge on this one.
Converted Organics Inc. (COIN) is a development-stage business seeking to use organic food waste as raw material to produce all-natural soil products combining both disease suppression and nutrition characteristics. The Company's process, which has been demonstrated in a pilot manufacturing facility, uses heat and bacteria to transform food waste into a high-value natural fertilizer.
The Company's initial facility is located in northern New Jersey, providing access for the delivery of feedstock from throughout this geographic area. The facility is within a special recycling zone and has been approved for inclusion in the Middlesex County New Jersey Solid Waste Management Plan.
Converted Organics recently hit the big-time, running from $2.25 a share all the way up to $14.14 a share in the last 52 weeks, before settling at just below $10 now. So why have shares gone up 300% in the last year you ask? There is good reason: COIN Logo
According to their last webcast, in the second quarter of 2008 their Woodbridge facility will be converting organic food waste to their all-natural fertilizer at the rate of 250 tons a day. That will bring in approximately $52,500 in revenue per day. There are 90 days in a quarter so they will have $4,725,000 in revenue per quarter. 40% covers cost of conversion so that leaves them with $2,835,000 in operating profit. Subtract an estimate of $1 Million in Selling and Administration expenses and that leaves $1.8 MM profit per quarter. With 4.23 million shares that means $.40 in earnings per quarter. And that's with one plant at half capacity. The plant at full capacity will convert 500 tons per day which means $.80 EPS per quarter OR $3.20 Per Year.
That sounds really good right? Well⦠almost too good in my opinion. After years of reading prospectuses, quarterly earnings reports, and press releases, Iâve become a bit skeptical. Especially from a company that hasnât made a dime â literally. Donât take my word for it, check out their financials:
Then thereâs the âDividendâ. Every Quarter, COIN pays out a quarterly common stock dividend of one (1) share of common stock for each twenty (20) shares of common stock outstanding, payable to all holders of record of the common stock.
I have to admit, I like the idea. Especially at current price levels.
The problem is that the number of outstanding shares will increase from 4.23 million to 5.14 million in the next year, which means the numbers I mentioned before are completely skewed. As they continue their dividend, further dilution will occur.
Kind of sounds like a pyramid scheme, doesnât it?
Pyramid Scheme
Something about this company turns a siren on in my head. But I could be wrong â anything Organic is popular these days, and maybe they can beat the odds and compete against large, established fertilizer companies that actually have revenue.
You be the judge on this one.
