How Rentech Put in a Strong 2011
As 2011 comes to a close, it's a great time to look back at what happened to the stocks that interest you. By making sure you know the important things that a company accomplished -- as well as the setbacks it experienced -- you can make a better decision about whether it's a smart investment for your portfolio.
Today, let's take a look at Rentech (ASE: RTK) . The tiny company has flown beneath many investors' radar this year, but with its connection to alternative fuels and the agricultural industry, Rentech's in the right place at the right time.
Stats on Rentech
|Year-to-Date Stock Return||29.5%|
|Market Cap||$352.9 million|
|Revenue, Trailing 12 Months||$175.2 million|
|1-Year Revenue Growth||42.9%|
|1-Year Profit Growth||NM (loss of $14.2 million over past 12 months)|
Source: S&P Capital IQ. NM = not meaningful.
What happened with Rentech this year?
Rentech is on the ground floor of what could become the next big energy trend: alternative biofuels. Companies including Rentech, Solazyme (NAS: SZYM) , and Amyris (NAS: AMRS) are all in the hunt to develop methods for producing fuel and chemicals from sugar cane, corn, and even garbage.
But in reality, Rentech makes much more of its money from nitrogen-based fertilizer. With crop prices at high levels, fertilizer companies like Terra Nitrogen (NYS: TNH) and PotashCorp (NYS: POT) have seen heightened demand for their products -- and with their emphasis on nitrogen, Rentech and Terra have an advantage over PotashCorp and its more mining-intensive peers.
That may be why Rentech decided to do a partial spinoff of its nitrogen fertilizer business. Rentech still owns 60% of Rentech Nitrogen Partners (NYS: RNF) , but the move helps the parent company more clearly define itself as an alternative-energy player.
Of course, other alternative-energy plays have started out looking promising but eventually fizzled out. Rentech's big threat is that it may not be able to find cost-effective inputs for its manufacturing process. But if it can beat that challenge, the stock may continue its strong performance into the future.
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At the time this article was published Fool contributor Dan Caplinger doesn't own shares of the companies mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Fool has a disclosure policy.