Institutional Analyst: Special Situation Research
IA's Special Situation Report, Tuesday 5/10/2011.
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1. Vertex Energy (VTNR) $1.70, Reports Good Numbers. Leaps to Top of Watch List.
2. Conference call today.
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Isn't it nice to have a small company, go up on small volume ? Really, isn't that the way it's supposed to be ? The company does better and better, the stock slowly goes up higher and higher (with occasional air pockets).
Shares are now up 327%, from where we added it to the Watch List about nine months ago, putting it at the top of our charts -- in terms of performance.
In the event you might think to yourself that you've "missed" this one (a natural response when assessing most 300% plus gainer) our thoughts are: "things are currently going great with what they have."
Here is an analogy. Let's say you own shares in a restaurant chain. They have three stores. The shares have gone from $1 to $3 on news that each store is profitable, growing and all around just doing great. They are doing well with "what they have." Which is three stores. If they have no intention to open any additional stores, it's pretty much game over.
But what if they do want to open more stores ? What if they want to open six more, twelve more or even twenty-four more ? Under that spotlight, as a shareholder you shouldn't be too concerned about recent price movement (to an extent), nor should you worry about the next quarters or even the next years growth --assuming they serve up a product which could have genuine national appeal.
In Vertex Energy's case, it's not more stores but more "facilities." Facilities to collect used oil. And facilities to process the collected oil. In keeping with the restaurant analogy, it could go from being a regional collector, processor and seller to national one.
In terms of national appeal, the last time we checked, Vertex collected approximately 29 million gallons of used motor oil in 2007 (most recent we could find), which accounted for approximately 3% of the entire recycled volume in the U.S.
The used motor oil collection market is highly fragmented with more than an estimated 700 used oil collectors nationwide. Based on a U.S. Department of Energy study dated July 2006, the estimated volume of used motor oil recycled each year is 945 million gallons, of which it is estimated that 83% is burned and 17% is re-refined. Vertex believes that there is a significant opportunity to increase the percentage of used motor oil that is re-refined rather than burned.
(If we were on retainer, we're sure we'd have more up to date numbers to share, but alas -- we are not.
Here's the numbers they released with working with "what they have," for the first quarter of 2011.
Revenue for the quarter increased 53% to $20.3 million compared to $13.3 million for the first quarter of 2010.
Gross profit increased 121% to $2.3 million compared with $1.0 million for the first quarter of 2010.
Gross margin per barrel handled increased by 84%, relative to the same quarter last year.
(It would probably be a good idea to ask about expanding and contracting margins, in today's conference call.)
As previously announced, Management of Vertex Energy will host a conference call today at 10:00 a.m. EDT. Those who wish to participate in the conference call may telephone 877-407-4019 from the U.S.; international callers may telephone 201-689-8337, approximately 15 minutes before the call. A digital replay will be available by telephone approximately two hours after the calls completion for two weeks, and may be accessed by dialing 877-660-6853 from the U.S. or 201-612-7415 for international callers, Acct # 380; Replay ID# 372420.
Press Release: http://markets.financialcontent.com/demo/?Page=MediaViewer&GUID=18409650&Ticker=VTNR
Disclaimer: This press release referenced and newsletter may contain forward-looking statements, including information about managements view of Vertexs future expectations, plans and prospects, within the safe harbor provisions under The Private Securities Litigation Reform Act of 1995 (the Act). In particular, when used in the preceding discussion, the words "believes," "expects," "intends," "plans," "anticipates," or "may," and similar conditional expressions are intended to identify forward-looking statements within the meaning of the Act, and are subject to the safe harbor created by the Act. Any statements made in this news release other than those of historical fact, about an action, event or development, are forward-looking statements. These statements involve known and unknown risks, uncertainties and other factors, which may cause the results of Vertex, its divisions and concepts to be materially different than those expressed or implied in such statements. These risk factors and others are included from time to time in documents Vertex files with the Securities and Exchange Commission, including but not limited to, its Form 10-Ks, Form 10-Qs and Form 8-Ks. Other unknown or unpredictable factors also could have material adverse effects on Vertex�s future results. The forward-looking statements included in this press release are made only as of the date hereof. Vertex cannot guarantee future results, levels of activity, performance or achievements. Accordingly, you should not place undue reliance on these forward-looking statements. Finally, Vertex undertakes no obligation to update these statements after the date of this release, except as required by law, and also takes no obligation to update or correct information prepared by third parties that are not paid for by Vertex. And since they are not a client, we'd be one of those "third" parties.
Going Concern Statements.
We would like to point out that the majority of companies listed on the
OTC Bulletin Board have factors which create an
uncertainty about the their ability to continue as a going concern. These
concerns are typically related to financing (or lack of), competitive
environments, lack of operating history and operating at loss levels which
is typical of most start-ups.
These statement can usually be found in their most recent 10Q filings and
typically you don't have to dig to far down past the financial tables. We
like to use http://www.pinksheets.com for quick and easy access to SEC
filings. We think it would be wise for most investors to assume that all
companies listed on the OTC Bulletin Board (and many on NASDAQ) have going
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