The NEXT name in my on-going series of the Top 25 Stocks for the NEXT 25 Years is Zoltek Companies, Inc. (NASDAQ: ZOLT). Zoltek is headquartered in suburban St. Louis, Missouri and has a current market capitalization of $1.1 billion. The stock is trading at $39. For full disclosure, I have been recommending Zoltek to the members of my web site since $19-20 just a few months ago. The stock is still a buy.
Zoltek develops, manufactures and distributes carbon fiber which has hundreds of applications. Zoltek is considered an alternative energy company as carbon fiber weighs less than traditional materials and therefore employs far less energy. Some of the applications are in primary building materials: Sporting goods, aircraft braking systems, and the blades on energy creating wind turbines. Zoltek has received a lot of attention in the wind turbines sector as the demand is very high for these windmill-looking energy generators. The carbon fiber making up the blades requires little to no maintenance and is lighter allowing for faster revolutions. Thus, more energy is generated by using Zoltek's carbon fiber.
Currently, Zoltek's carbon fiber is found in small production, high performance automobiles. Zoltek is developing applications with the auto industry for larger production, lower cost models. The auto and airline industry will provide huge growth opportunities for Zoltek, especially as vehicle or plane weight is relevant to energy savings.
Zoltek's entire production capacity for 2007 and 2008 is already booked. The company's visibility to revenues and earnings is at 100%. Zoltek is working on expanding its current production capacity as the company sees an ever growing demand for its products world-wide.
Zoltek.s numbers are quite impressive with huge growth. The company has a September 30 fiscal year end. For September 30, 2007 I estimate Zoltek's revenues at $158 million and earnings per share of $.79. For September 30, 2008 I estimate revenues of $250 million and earnings per share of $ 1.52. The company has a stated revenue goal for fiscal year 2009 of $500 million. It may prove to be a little aggressive, but the growth rate for ZOLT is dramatic.
The industrial world is gradually moving to a model of tougher materials at a lighter weight. Zoltek's carbon fiber product fits the bill superbly. What makes Zoltek's addressable market so large is the heat resistance of carbon fiber: It does not weaken or break down under high heat conditions.
Zoltek has had a good run so far but the applications and manufacturing capacity are ever expanding. Zoltek has a tremendous opportunity to be a Top 25 Stock for the NEXT 25 Years...
Georges Yared is the CIO of Yared Investment Research.
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