Solazyme Inc (SZYM) Is Planting Itself for Success

Page 1 of 2

Watching a small-cap company come into its own is like watching a plant grow. As investors, we provide the nutrients to help it grow, hoping that the seed of an idea takes root. If we’re lucky, that company will grow and will start to bear fruit in the form of shareholder value. Obviously, not all of these companies will take root, but even the ones that do take time to go from seedling to harvest. This is where many investors in Solazyme Inc (NASDAQ:SZYM) are right now, waiting for a seedling to bear fruit.

Let’s take a quick look at what’s going on at Solazyme and when we can expect this company to start bearing shareholder value.

The wait is the hardest part
Solazyme’s projects are a botanist’s dream. This is a company that uses algae to produce a wide variety of products ranging from engine lubricants to jet fuel and skin products. Its efforts have garnered lots of attention from a wide array of potential partners. While there are several consumer-related ideas the company is pursuing, some of its more interesting projects involve working with the U.S. government, as the departments of Defense and Energy have both participated in research projects involving the production and use of biodiesel created from algal oils. The DOD hopes that these oils could be used as a replacement fuel for its diesel-powered naval vessels.

With this wide range of products, there is a lot of potential. Based on the current products Solazyme is working on, the company estimates a possible market in the range of $10.4 billion to $14.5 billion. One of its first products that has made it to market is the skin-care product Algenist. Product revenue for the anti-aging skin products has nearly tripled year over year, and it generated more than $16 million for the company throughout 2012.

Before we get ahead of ourselves, though, let’s keep the company’s progress in perspective. Three of its joint venture projects are still in the development phase and won’t generate any revenue until the beginning of 2014. One of the major projects to ramp up at that time is the renewable-fuels joint venture with Bunge Ltd (NYSE:BG). Their new facility will produce up to 300,000 metric tons of renewable fuel.

On the other hand, there are some very strong indicators for this company. Not only has it secured enough financing through 2014, but it also has backing from major companies through those joint ventures. Along with Bunge, Solazyme has also entered into partnerships with Chevron Corporation (NYSE:CVX)The Dow Chemical Company (NYSE:DOW), and Unilever plc (ADR) (NYSE:UL) to develop renewable products from algal oils. If these large companies all have a stake in Solazyme’s success, then surely there’s potential in the company’s ideas.

The company’s two largest threats are its competitors, and low energy prices. Amyris Inc (NASDAQ:AMRS) is its most direct competitor that also offers a wide range of offerings and products from natural byrpduct oils. The company has developed a method that uses microbes such as yeast instead of algae to synthesize oils. Some may also consider Rentech, Inc. (NYSEMKT:RTK) a direct competitor, but its finished products are more fuel related and less diverse than Solazyme’s.

Page 1 of 2
blog comments powered by Disqus
Insider Monkey Headlines
Insider Monkey Small Cap Strategy
Insider Monkey Small Cap Strategy

Insider Monkey beat the market by 52 percentage points in 24 months Click to see monthly returns in table format!

Lists

The 10 Richest Stand Up Comedians in the World

The 10 Fattest Countries in the World

The 5 Best Summer Jobs for Teens

The 10 Most Religious Countries in the World Keeping the Faith

The 10 Most Educated Countries in the World

The 10 Most Popular Cell Phones in the World

The 10 Drunkest Countries in the World

The 10 Most Expensive Private Schools in the World

The 10 Smallest Countries in the World

Walking Dead Season 5 Spoilers You’ll Wish You Didn’t Know

The 10 Poorest Countries in the World

The 10 Greenest Countries in the World

The Top 10 Countries with the Highest Population in the World

The 10 Most Visited Countries in the World

The Top 10 Star Wars Characters in the Iconic Series

The 10 Most Expensive Android Phones in the World

5 Reasons Why The Illuminati Is Real and a Threat to Society

The 6 Scariest Halloween Costumes Ever Screamed At

The 4 Biggest Hedge Fund Managers in the World Today

The 15 Most Densely Populated Countries in the World

The 10 Biggest Tea Drinking Countries in the World

Top 6 Ways to Improve Your Checkout Process and Close Sales

The 5 Most Profitable Online Businesses You Can Start Today

The 20 Most Profitable Hospitals in the US

The 5 Most Profitable Home Businesses to Start

The 7 Teams that Will Win the Stanley Cup in 2015

The Top 10 Most Expensive Digital Cameras to Snap Stunning Shots With

The 10 Highest Quality Fast Food Restaurants In America Today

The 8 Best Halloween Decorating Ideas to Spook Up Your House

10 Marvel Women that Should Get a Movie Right Now

The 20 Best Remixes of Popular Songs that Will Make You Forget the Originals

7 Most Expensive Cities in the World

5 Least Expensive Cities in the World

10 Celebrities Who Believe In Scientology

10 High Margin Food Products to Build a Business Around

The 10 Most Expensive Clothing Stores in the United States to Get Decked Out At

The 5 Biggest Kickstarter Scams That Swindled Backers’ Donations

The 10 Most Expensive Boarding Schools In the World

50 Crazy Facts About Japan You Won’t Believe

Top 10 Least Expensive Hybrid Cars to Save the Planet With

The 10 Biggest ‘Gate’ Controversies in History

The 10 States with the Highest Nursing Shortages Leaving Their Hospitals Depleted

The 10 Best Value Investment Blogs that Every Investor Must Read

The 6 Cheapest Boarding Schools in Europe 2015

The 5 Most Expensive Cars To Insure in the World

The 10 Most Common Genetically Modified Foods

10 Self-Made Billionaires Who Came From Nothing

The 10 Most Expensive Cities to Live in North America

The 13 Most Expensive Headphones in the World to Represent

The Top 20 Wealthiest Soccer Teams in 2014

Subscribe

Enter your email:

Delivered by FeedBurner

X

Thanks! An email with instructions is sent to !

Your email already exists in our database. Click here to go to your subscriptions

Insider Monkey returned 47.6% in its first year! Wondering How?

Download a complete edition of our newsletter for free!