|Written by GSCR Staff|
|Tuesday, 11 December 2012 11:51|
Like most people, I like surprises. I have followed Rentech (NYSE – RTK - $2.96) since March, before the stock’s 50% move higher. We noted in our blogs on peenystockjunction.com as well as in other Goldman Small Cap Research reports this past spring.
Following the news today, we believe that the stock could be a big winner in the early part of 2013. Here is the scoop:
RTK owns 61% of Rentech Nitrogen Partners, L.P. (NYSEAMEX – RNF) which is up big this year, which is why RTK has had such a strong year. Rentech has deployable-ready, clean energy technologies that can produce power and other fuels from the conversion of wood and agricultural residues and straw, along with the production of hydrocarbons for synthetic fuels or chemicals by converting syngas generated from carbon-bearing materials. At present, Rentech, Inc. is developing projects in the U.S. and abroad and marketing licenses for conversion of carbon-bearing solids or gases into hydrocarbons and electric power, based on its technologies, which could prove to be extremely profitable.
The Company had major news today which we believe should be used as a catalyst to buy the stock. These include a special dividend of $0.19 payable on December 27th, to holders as of the close of December 20th. This represents a 6.4% dividend rate. Plus, management will redeem all of its outstanding 4% notes which will save $700,000 in interest payments through an early redemption. Once completed, RTK will have no debt.
Management has also elected to accelerate business development action to 1Q13. Among the alternatives being considered to maximize the value of that business are potential partnerships for the commercialization of its technologies, which the Company would enter into only if such partnerships would be financially attractive and provide near-term cash.
The completion of all of these strategies illustrate management’s strong expectations for the future and should serve as triggering events for the stock, in our view. The stock has hit a new 52-week high today and clearly there is more to come...
Disclosure: I am neither long nor short these shares but I may elect to purchase the stock within the next 48 hours.
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