Finally Decided to Buy SharesI've been watching this stock for a few months and finally decided to take a small iniital position today. I like the recent insider purchases which suggst the Strathmore plant is nearly funded, and the agronomic results of the Lethbridge trials look very positive.
A few reasons I decided to take the plunge, despite plenty of speculative risk:
1) Earthrenew is solving at least two BIG problems at the same time: what to do with livestock waste, which is continually a real problem for feedlots. The problems of leaching into aquifers and other water sources is well documented, and the fact that ERTH can take the problematic elements out of the manure while processing is a real plus.
Perhaps even more important are the problems the world faces with soil depletion, which tradiitonal fertilizer magnifies. ERTH seems beautifully positioned to serve the regenerative agriculture movement, and add vital organic matter back into the soil.
2) I love that the company can sell the excess energy from the natural gas turbine into the grid, reducing costs in a big way.
3) The value-added partnerships, such as with the biochar producer, that will bring buyers to the company and create a ready-made market. They also have an off-take agreement (at least in principal) with an organic fertilizer distributor in the Okanagan.
4) The scalibility of the modular plants, and the company's desire to set up showcase facilities in three locations shows the scalability of the business.
So, there's lots to like.
Now for the risks:
1) Share dilution is the thing I most fear. I'm sure that building out three plants won't come cheap, and at the current share price it could handicap future share price appreciation. I notice they are exploring grant options, which is good, but they'll need a lot more capital for the US flagship facility they are planning to build. Hopefully they can do some of that with cash flow once the Strathmore facility is up and running.
2) Obviously, industry uptake in those crucial early days (before the brand is known) can also be promlematic, so hopefully the work they're doing to form partnerships early will bear fruit.
3) Will the technology work on a mass scale as they claim. One would assume so, but I think once they receive verification on a larger scale it will reduce execution risk.
Nevertheless, I couldn't sit on the sidelines any longer. I really appreciate what this company is trying to do in terms of solving systemic problems in agriculture, and I hope they succeed as much for the planet as for us shareholders.