Solazyme, Inc. (NASDAQ:SZYM)

CAPS Rating: 4 out of 5

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Player Avatar Jeffrey2012 (< 20) Submitted: 8/8/2011 8:48:27 AM : Underperform Start Price: $17.67 SZYM Score: +70.24

The company is still in experimental stage working to scale into production their micro algae facility in IL. Problem that I see with this company is that it's still all talk and they don't have concrete results yet.

The down market is going to punish companies that aren't able to deliver and that time frame is narrowing for them.

Their biggest success in their Navy contracts is suspect since military spending cuts will definitely affect this alternative fuel. If I remember correctly, the navy had spent millions on this alternative fuel and was overpriced. It was a big controversy in the Navy Times since it made a lot of people question the value of overpaying for fuel.

They are going to suffer in the meantime until at least early next year when they truly gear up to produce fuel.

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Member Avatar majorkq (81.91) Submitted: 8/31/2011 8:42:07 PM
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wait a minute... this is a contradiction.

You say they don't have concrete results yet and then acknowledge their Navy success.
They deliver the 283,000 gallon Navy contract, the largest delivery ever, in record time ahead of schedule.

If your main gripe remains the lack of fuel buyers, what makes SZYM interesting is the fact they can penetrate multiple markets. The fuel division is their lowest margin but highest volume market. Consider the chemical, fuels, & healthcare sector, all with ready buyers/suppliers that have higher margins (but lower volumes) which is ideal for start up's such as this.

Member Avatar Jeffrey2012 (< 20) Submitted: 9/2/2011 4:27:59 PM
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Here's what I mean by concrete results. They are relying on non long term contracts right now. They have no significant committed customers. The military is going to be hit in the coming downsizing and I can guarantee you expensive projects will get gutted. If solazyme doesn't get real contracts signed for the long term they are going to face significant headwinds going forward.

Right now, you are purchasing this company based on a promise they will make it big time. I'm sorry, but it's a wee bit too pricey to purchase. So far, my short on this has been pretty good on this expensive dead weight.

Member Avatar Jeffrey2012 (< 20) Submitted: 9/2/2011 4:28:59 PM
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In fact, relying on government for revenue going forward for the next few years at least is going to be extremely hazardous to a companies health even more so for experimental phase companies such as Solazyme.

Member Avatar dmkj50 (64.94) Submitted: 9/12/2011 9:48:10 PM
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The Navy contract is a good start to build on. It is an extremely small contract considering how much fuel the Navy can go through in just one day. My main concern is how much savings does it bring to their fuel bill and how happy are they about doing business with the company? If this works out, it could be a steping stone to other contracts down the road and not just with the Navy. Think fuel bill for the military for one day. Now if the company can make a worthwhile dent in it think of the potential. And it won't take much of a profit margin to make alot of money.

It may be too pricey right now but it think the potential more than covers that. That's probably why the price is as high as it is. It looks like the company may be starting to gain some traction and if they are can they build on it. Sense you are a short you better hope you are still not in that position if they get a "real contract" or that position just might be an "expensive dead weight".

Member Avatar Jeffrey2012 (< 20) Submitted: 9/29/2011 2:56:49 PM
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Well if you think the potential more than covers like that for many stocks your going to get slaughtered. I prefer to see results and then go in for the cover. So far, my expensive dead weight has been extremely profitable.

Member Avatar TMFLomax (43.98) Submitted: 10/7/2011 3:19:24 PM
Recs: 2

I also take exception to the "all talk" contention. Actually, Solazyme has more customers than the Navy; it has commercial customers. Its skin care lines are available in places like Whole Foods and Sephora, and it also has development partnerships and customer relationships with companies like Chevron, Dow Chemical, and Unilever. I covered it here, having bought it for my Rising Star portfolio for Fool.com: http://www.fool.com/investing/high-growth/2011/07/13/rising-star-buy-solazyme.aspx

There is risk, it IS a start-up in a nascent space, but like I said, I do have a problem with the "all talk" comment. It actually has some pretty impressive walk to go with its talk, ha.

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