There have always been heated discussions about the dangers of U.S. over-reliance on foreign oil. As a result, many companies are engaged in researching alternative energy sources. Recognizing that the growth of the sector is important to the health of the American economy, thousands of investors have also become interested in putting money here. Accordingly, investment options are now plentiful in the industry, ranging from companies that design and produce biofuels to companies that manufacture engines that run on biofuels.
FutureFuel (NYSE: FF) may be one of the most attractive plays in today’s market for companies that manufacture biofuels and bio-based chemical products. FutureFuel Corp. was created in 2005 to acquire FutureFuel Chemical Company (formerly named Eastman SE, Inc). The deal was completed on October 31, 2006. However, the newly formed company has since developed into an ascendant force in the U.S. biofuel industry. FF evaluates technologies used to make fuels and other bio-based products. Its product portfolio includes an activator for a major detergent firm, promoters for a chemical company and intermediates for a life sciences company. FutureFuel’s products include chemicals in quantities ranging from a few hundred pounds to many millions of pounds.
For the first nine months of 2012 revenue for the company was $277.2 million, up 25.9 percent from $220.3 million for the first nine months of 2011. FF’s adjusted EBITDA was $46.5 million, a 10.5 percent increase from $42.1 million for the same period in the prior year. Net income increased to $28.1 million from $23.9 million in the first nine months of 2011. Gross profit of FutureFuel’s chemicals segment increased in the third quarter of 2012 as compared to the third quarter of 2011. Net income for the third quarter of 2012 was similar to that earned in the third quarter of 2011.
“Overall, we were pleased with our financial results for the third quarter of 2012. While they may not have demonstrated a high level of growth relative to the third quarter of 2011, the results were reassuring given the volatility seen in the biodiesel market in the third quarter of 2012,” noted Lee Mikles, FutureFuel’s President and Chief Executive Officer.
FutureFuel currently trades at around $13.54 per share and has a 52-week range of between $9.01 and $13.58. The company has a market cap of $559 million. It’s competitors include Archer Daniels Midland Company (NYSE: ADM), which has a market cap of $21 billion and trades at around $31 per share and E. I. du Pont de Nemours and Company (NYSE: DD), which has a market cap of $44.1 billion and trades for around $47 per share. FutureFuel is well positioned to grow as alternatives to fossil fuels gain popularity. It’s a long-term investment that could become extremely profitable.