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

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

4 BuzzWorthy Cannabis Stocks And Some Smoking Derivative Plays

The 10 Healthiest Fast Food Chains in America to Dine At

The 5 Most Expensive Cat Food Brands You Can Spoil Your Kitty With

The 6 Best eCommerce Platforms for Small Businesses

The 10 Worst Mistakes an Entrepreneur Can Make

The 5 Most OP Characters in League of Legends to Carry Games and Crush Foes With

The 5 Best Foods to Eat Before Running that Will Help You Pound the Pavement

10 Glaring Plot Holes in The Walking Dead that a Zombie-Filled Bus Could Drive Through

The 5 Biggest Celebrity Stoners Who Love Their Reefer

The 10 Most Overrated Movies Of All Time by Out-of-Touch Critics

Top 6 Least Expensive Cruise Destinations For 2015 that Will Take You to Paradise

10 States with Lowest Substance Abuse Rates in America

The 14 Most Watched TV Finales Ever

The 10 Best Selling Role Playing Games of All Time for PC

10 Most Influential Papers In Economics

Top 8 Biggest Charities in the US

10 Worst Celebrity Career Moves Ever

Top 10 Best Paid Tennis Stars in the World

Top 6 Cities For The Ultra Rich to Live in Comfort

10 Cities with High Demand for Nurses

6 of the Worst Greeting Card Messages Ever Crafted

How to Make Money in ArcheAge and Build Your Empire

10 Foods To Eat To Lower Cholesterol Levels

The 10 Most Hated Television Characters of All Time

The 30 Worst Halloween Costume Ideas Ever Brought to Horrible Life

10 Vocational Skills in Demand Today with Jobs Waiting to be Filled

10 Best Places to Visit in Central and South America

The 10 Greatest Empires in History Which Nearly Conquered the World

The 6 Cheapest Boarding Schools In America 2015

5 Clear Reasons LoL is Better than DotA, Continues to Rule MOBAs

The Only 9 Teams with a Chance to Win the Super Bowl

The 15 Most Common Phobias in America that Induce Fits of Panic

Top 6 Least Expensive Tourist Destinations in 2014

Jim Goetz, Peter Fenton, Jim Breyer: Top 6 Venture Investors for 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!