RE: NEWSI think there is a big difference between being confident about winning a contract & actually getting the deal confirmed. The deal is for the full 300K tons with possible additional tonnage later which begins shipping immediately. The pricing looks ok at $666 Cdn per ton. This will almost ensure the processing pipeline is full until the end of 2005. Since each plant can process about 90K tons per year, allowing for some maintenance & repair downtime, this contract will utilize about 3 1/3 plant years or 40 months of processing time over the next 31 months. If Belldune is running at full production speed on Jan 1, 2004 (optimistic?) & both plants can run at the 90% level from now (Jan 2004 for NB) until Dec 31, 2005. That works out to be about 412K tons of capacity from June 1, 2003 until Dec 31, 2005. That means that the contract announced yesterday will consume about 72.8% of the total capacity over that period of time. That is very significant.
Consider also that the GE contract for 5 years has been described as potentially providing significant business to Bennett. They are also working on current contracts such as Labrador & still bidding on smaller deals. I do not believe that the New Jersey deal would have been awarded without substantial proof of the NB facility approval & operation by approximately Jan 2004. The evidence points to NB being a go & a virtually full processing pipeline for the next 31 months. It seems to me that the $2 EPS guidance from Bennett for FY2004 is very achievable & probably conservative now that the NJ deal is done. I suspect that the analyst should applaud the news & revise estimates upward since most currently sit below the $2 level while they were waiting for further confirmation. The clear evidence points to FY2004 EPS of $2.00-$2.50, depending on when NB gets up to speed & how well it functions, & close to the Bennett guidance for 2005 of $2.50. That makes the forward PE about 5.8 based on current share price of $14.50 & EPS of $2.50. This data does not even take into consideration that Kirkland lake or another future location may be running before the end of 2005. With a 3 year EPS growth rate of 220% total ($0.78-$2.50) or about 48% annually compounded, the stock has enormous room to move upwards over the next 2-3 years.
In summary, it baffles me why anyone would be selling at the current price unless they simply do not understand the fundamentals. I remember when I was holding Cinram at the beginning of March & they came out with a fantastic earnings report & the stock dropped from $9.40 to $9.00 the next day & subsequently dropped to about $8.85 at the open the following day. I was totally mystified but the stock turned abruptly and went from $8.85 to $15.40 (74% gain) in a straight line over the following 9 weeks. Do not be fooled by a short term market reaction to news. The stock will eventually reflect the true fundamentals. The price of Bennett stock will be much higher in the months ahead....the fundamental analysis above tells us so. This is still a small cap stock which means it is underfollowed & thusforth poorly understood. Eventually that will change as the company grows & more evidence of success comes forth & creates more market recognition. If you cannot deal with the volatility then turn off the computer. Good luck, Cheers!!!