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 (AMEX: 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)
CAPS Rating **

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 (Nasdaq: SZYM  ) , and Amyris (Nasdaq: 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 (NYSE: TNH  ) and PotashCorp (NYSE: 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 (NYSE: 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.

High oil prices are making stocks like Rentech look more attractive. Learn more about three more stocks that will prosper from $100 oil in the Motley Fool's latest special free report on energy. It's yours free, but only for a limited time, so take a look today.

Click here to add Rentech to My Watchlist, which can find all of our Foolish analysis on it and all your other stocks.

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.

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  • Report this Comment On December 14, 2011, at 7:29 AM, cmsrlh wrote:

    I have, off and on, watched rentech for about 15 years. I wouldn't touch it with someone elses broom handle.many failed/aborted projects. Latest wais an electricity gen at Port St Joe Fl powered by wood pellets--RTK walked away.

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10/27/2016 10:49 AM
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