The boom in demand for wind turbines--a.k.a. windmills--to provide alternative energy has boosted Zoltek (ZOLT). Its stock rocketed from 19 in December to 46.21 on July 11, powered by the jump in orders for its commercial-grade carbon fiber for use in wind turbines. "The wind energy business remains very healthy," says Michael Carboy of Signal Hill Capital Group, who expects Zoltek to get new long-term contracts from turbine makers Vestas of Denmark and Gamesa of Spain. Carbon fibers help make the turbine blades stronger. Zoltek also supplies carbon fiber to deep-sea oil drillers for their platforms' flotation systems. Demand for Zoltek's products exceeds supply, and that won't change in the next two years, says Carboy. He expects profits of 72 cents a share in 2007 and $1.60 in 2008, up from 13 cents in 2006. William Gregozeski of CapStone Investments says the World Wind Energy Assn. sees the wind market growing at 15% in the next three to five years, with the trend toward larger blades, where carbon fiber is required. He rates Zoltek a strong buy.
Note: Unless otherwise noted, neither the sources cited in Inside Wall Street nor their firms hold positions in the stocks under discussion. Similarly, they have no investment banking or other financial relationships with them.
By Gene G. Marcial