Tuesday, February 23, 2010

Fertilizer Misuse - India Learns the Hard Way

Today's Wall Street Journal has a very interesting and relevant article to the long term prospects of China Green Agriculture (CGA $14.10), one of the few stocks recently profiled here. The story focuses on rapidly declining agricultural production in India as a result of years of fertilizer misuse for short term production gains The result is unproductive, damaged soil and an increasing reliance of food imports to feed its population.

China Green Agriculture is a fast growing fertilizer company, also in an emerging market, that manufactures and distributes a balanced organic humic acid based fertilizers that are customized so as to produce the most effective and productive long term benefit to soils based upon geographic region and crop. The raw material in their product line is weathered coal, a cheap and widely abundant resource in China. The Chinese government, having learned learned from India's mistakes, recently eliminated the VAT tax on CGA's organic product production for five years. To learn more about CGA, read this blog's article from December 18, 2009. CGA was at $15.00 back then and subsequent rallied to over $18. The recent weakness represents a good entry point on top of a very positive earnings report.

Do your own due diligence.

Monday, February 1, 2010

Good Sign - Verenium and BP Extend Collaberation Agrement

Verenium an BP, whose 18 month cellulosic ethanol joint development agreement signed in August 2008 was set to expire, extended the agreement by one month to March 1, 2010. BP will pay Verenium $2,500,000 as part of the extension. The most important portion of Verenium's short press release, was the disclosure that the one month extension is intended give BP and Verenium the additional time required to "negotiate the terms of a multi-year extension of their collaboration program".

A multi-year extension of the collaboration agreement will certainly help remove some of the simmering doubts that have kept the share price of Verenium depressed and should be a catalyst to future share appreciation. The two companies continue to await word from the DOE regarding their application for financing of their proposed 36 million gallon Highlands, Florida cellulosic ethanol plant scheduled to break ground this year. Many investors in Verenium expected the DOE financing would have been in place by the end of 2009. This delay, beyond market expectations, has certainly weighed on Verenium's share price over the last six months.

As I noted in my entry on January 5, 201o with VRNM was selling at $4.80, : "Verenium...Is This Dog Ready to Start Barking?", VRNM has been the single dog of the handful of stocks profiled on this blog since its inception. I also made the case that it seemed that a turnaround could be imminent. The news today represents one small, but important step in a turnaround that could certainly lead VRNM to new 52 week highs.

As always, do your own due diligence.