Basically, Globus has no control over realizations in both the bulkena/ethanol nor consumer segment. Their input costs including fuel, grains and plastics are also commodity prices beyond their control. Globus is basically a commodity chemical company. How can mgmt “guide” on margins? They can’t… Margins will be exhibiting cyclical behavior with not much predictability. If you see OPM over the years, 14 is about average. 24 is clearly way above the mean and is in no way sustainable. Thus a commodity “chemical” manufacturer like Globus will be a cyclical stock
and will exhibit huge volatility.
The best feature of Globus, however, is its growth rate. There is no negative there! They are keeping on growing… State after state… growth runway is large given ethanol blending… Value, value plus and desi premium are a play on rising rural income… Each new state makes it easier for them to add the next state.
As the growth story is intact, I actually added up. Will add up some more if further drops after Q2 provided growth continues. Note that for a bulk chemical entity, the bigger it becomes the better it becomes and will ride over OPM cyclicality which will never truly go away.
Subscribe To Our Free Newsletter |