Buy Martek (MATK)
As per my note yesterday, I thought about the Martek situation. And finally, here is my decision: Buy Martek (MATK) if you do not own it yet & If you own it then hold it for eventual gains. Selling this at this price is just plain stupid. Think about it for a moment. Here's my thoughts:
1. MATK is the leader (over 80% market share) in DHA & ARA suppliments.
2. DHA & ARA is good for your brain / eyes / heart and many more body parts
3. Most of the sale comes from infant fomular makers (milk for babies)
4. No parents will buy milk that does not contain DHA & ARA for their babies
5. Understand that sales will fluctuate due to few large customer base (4)
6. Sales will definately grow so they have to have excess capacity (cost)
7. Out of 30 million shares (float), 13 million traded today between $21.5-$22.5
8. Who do you think bought 13 million shares today? (institutions with brains)
9. About 30% of all shares are being shorted (they all have to buy MATK back)
10. Most recent quarter: Revenue $70 million vs. $40 million same time last year
11. Most recent quarter: Earnings per share $0.16 vs. $0.00 last year
12. Growth will come from international business such as Korea and China
13. More food products will utilize DHA & ARA: cereals, cookies and drinks
14. There is no known competitor except for Fish Oil (DHA is in fish)
15. Fish oil does not compare to Martek's which is from MicroAlgae
16. Acetrader will hold its shares
Due to recent down grades by the wall street (that's how they buy this on the cheap from emotionally scared retail investors) MATK might be weak in coming weeks. However, we do not invest for the next few weeks. Looking into next few quarters, there's no question that this offers value. Buy now if you still do not own this (what a present!) or hold this if have already have some. Bottom Line: I liked this at $26, now at $22 I like it even more. Fundamentally, Martek's business has not changed at all. It's future still looks bright. Buy, I say.
P.S: The market is looking weaker by the day. We may actually see the real bottom of this year. However, this does not change our original plans. Keep saving your money and keep investing your money. A few years from now, current prices will seem like a joke. On any further weakness, try to buy RICK / UTK / EXPEZ ..... well everything we own.
1. MATK is the leader (over 80% market share) in DHA & ARA suppliments.
2. DHA & ARA is good for your brain / eyes / heart and many more body parts
3. Most of the sale comes from infant fomular makers (milk for babies)
4. No parents will buy milk that does not contain DHA & ARA for their babies
5. Understand that sales will fluctuate due to few large customer base (4)
6. Sales will definately grow so they have to have excess capacity (cost)
7. Out of 30 million shares (float), 13 million traded today between $21.5-$22.5
8. Who do you think bought 13 million shares today? (institutions with brains)
9. About 30% of all shares are being shorted (they all have to buy MATK back)
10. Most recent quarter: Revenue $70 million vs. $40 million same time last year
11. Most recent quarter: Earnings per share $0.16 vs. $0.00 last year
12. Growth will come from international business such as Korea and China
13. More food products will utilize DHA & ARA: cereals, cookies and drinks
14. There is no known competitor except for Fish Oil (DHA is in fish)
15. Fish oil does not compare to Martek's which is from MicroAlgae
16. Acetrader will hold its shares
Due to recent down grades by the wall street (that's how they buy this on the cheap from emotionally scared retail investors) MATK might be weak in coming weeks. However, we do not invest for the next few weeks. Looking into next few quarters, there's no question that this offers value. Buy now if you still do not own this (what a present!) or hold this if have already have some. Bottom Line: I liked this at $26, now at $22 I like it even more. Fundamentally, Martek's business has not changed at all. It's future still looks bright. Buy, I say.
P.S: The market is looking weaker by the day. We may actually see the real bottom of this year. However, this does not change our original plans. Keep saving your money and keep investing your money. A few years from now, current prices will seem like a joke. On any further weakness, try to buy RICK / UTK / EXPEZ ..... well everything we own.
posted by Jaewoo | 5:05 PM
2 Comments:
I like your analysis (even with my lack of previous detailed information on this company). I have similar feelings about MATK and NTE. Both are solid companies that have suffered from some over-reaction in the market. I have done a lot of research on NTE and finally get their business.
I am waiting for both these stocks (NTE & MATK) to stabilize and jump in when they shrug out of the caves they are in now.
I have to say, i am starting to enjoy investing :)
-Joseph
Jo:
You're obviously bright. Yes, you should do your homework yourself. And yes, you can wait for those as well. Analyzing stocks can be not only profitable but fun too. Go nuts!
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