NTRZ.OB

[Ramsburg]

Profile: NutraCea, a health science company, engages in the development and distribution of stabilized rice bran and rice bran-based products for the consumer food and animal feed sectors. Its products include food supplements and medical foods for humans and animals, as well as cosmetics and beauty aids based on stabilized rice bran, rice bran derivatives, and rice bran oils. The company's customers include consumer nutrition and healthcare companies, domestic and international food companies, and companion animal feed manufacturers. NutraCea was founded in 2000. The company was formerly known as NutraStar Incorporated and changed its name to NutraCea in 2003. NutraCea is based in El Dorado Hills, California.
Website: http://www.nutraceacorp.com
Market Cap: 110M

Trading Idea:
This is another penny from Michael's list, yesterday it had a great session breaking out to new short term highs with HUGE volume.

Michael posted an interesting research on September 10:

Nick sent a mail last week and asked for my opinion on NutraCea.

This could have ended with a quick look at the chart and a reply back to Nick that the stock looked good but I decided to dig a little deeper after all the stock had some pretty interesting fundamentals:

• The company converts the world largest food waste into a very nutritious food
• Demand outstripping capacity
• Very strong balance sheet
• Profitable and cash flow positive
• Product backed by strong patents
• Expansion into mass-market retail (supermarkets and chain retail stores)
• Expansion not expected to be dilutive
• Strong pricing power
• Heavy insider buying
• Factories running 24/7
• Plan to list on national exchange (already Compliant from a regulatory standpoint)

So here are some weekend reading on this little penny gem  

Background

NutraCea, a health science company, engages in the development and distribution of stabilized rice bran and rice bran-based products for the consumer food and animal feed sectors.

NutraCea merged RiceX on October 4, 2005. The benefits of the merger to NutraCea are substantial. Specifically, the financial position of NutraCea has been strengthened as a result of the elimination of $2.4 million of debt and an infusion of $7.85 million of cash that exceeded the requirements of the merger agreement by $2.4 million. Also, NutraCea will no longer be dependent on a major competitor, RiceX, as the sole source supplier of stabilized rice bran, its principle raw material. Finally, the ambiguity of ownership of intellectual property related to stabilized rice bran between NutraCea and RiceX is resolved with the merger.

Rice is the world largest human food source and the world's rice mills produce 60 million metric tons of rice bran. The usage of Rice bran was previously limited to feeding animals, burned as fuel or wholly discarded each year. Once considered too perishable and unable to be processed for human consumption, NutraCea's scientifically stabilized rice bran is poised to become one of the world's leading and truly affordable combatants of malnutrition, and a universally available, all-natural ingredient for better health.

NutraCea build their factories in close proximity to the Rice mills under long-term supply agreements. The factories are either producing Stabilized Rice Bran to food processors or further refined to Soluble or Insoluble Fiber.



Because Rice bran is basically a waste product without NRTZ's technology the raw material is very cheap:



The cost of a factory that produces Stabilized Rice Bran is $3 million and the annual revenue potential is $10.5 million. The cost of a factory that produces Soluble or Insoluble Fiber is $7 million and the annual revenue potential is $21.6 million:



The business model is simple:



So as long as there is still demand for the product (when will the world run out of demand for food?) and there are still Rice Bran to be processed (60 million ton) it seems like NurtraCea will prosper.

Demand

As said the world will most likely not have an abundance of food anytime soon but what I especially like about NutraCea is that it appeals to all segments of the market (including Cats and off course Dogs )

Lets start with the choosiest first: the typical American male   struggling with overweight and enjoying a few too many beers. Don't worry after a late night drinking NutraCea is there to make you feel better in the morning when you eat your nutritious breakfast cereals. In case you are more to Egg and Bacon (who isn't?) then you can eat fiber products based on NRTZ's trechnology that are focused on alleviating gastrointestinal disorders. Like a cake in the afternoon? No problem. NutraCeu will soon provide ingredients for nutritious cakes. Till now this demand has been met through partners and by using TV informercials but NutraCea will soon start distributing through some of the largest Retail Chains and Supermarkets.

If you happen to have a pet you might feed it with Purina pet food, which contains NutraCea's stabilized rice bran to its equine feed formulations. You would probably be choked if you knew how much the western world is spending on Pet food (At least if you live in Africa  )

And NTRZ is partnering with some major companies:



But that is not all they are also partnering with governments around the world to solve one of the largest global issues. Hunger!

The main food source in the third world is Rice and to use Rice Bran which otherwise would have been burned to feed the masses. NutraCea have signed agreements to build production facilities in the Dominican Republic, Guatemala, El Salvador and Jamaica.  The potential of this business area (and I am not shy to call this a business because if NTRZ hadn't invested in the intellectual property Rice Bran would have been continued to be burned for decades) is mind bubbling. This is probably the cheapest and healthiest food source available for the third world.

Production capacity

Who cares about demand if there is enough supply to meet it?

Well that is the point. You have a very cheap raw material and nobody except NRTZ is able to transform it into a very nutritious food source. In fact there have been several unsuccessful attempts to copy NRTZ's technology during the last several years but NutraCea has protected their intellectual property with several patents:



As they sign up and increasing number of food processors, distribution channels and governments they are not able to meet demand, The result is that their existing factories has been running on 3 shifts 24 hours per day 7 days per week. At the same time they have used the opportunity to increase prices with between 30% and 300%. That sounds like something that might create very good returns for the shareholders so lets look into the financials.

Financials

So who cares about demand and supply if the company is not able to transform it into some solid earnings?

Well let's have a look at the P&L:



Revenue increased 1,290% in Q2 year over year. This is partly due to the merger with RiceX. But if you compare to the results from both companies in Q1 2005 the revenue still increased with 300% year over year.

As can be seen the company turned a corner last quarter with the fist ever profitable quarter but that is already history. The real issue is how earnings will look in the future. The company doesn't provide guidance but they do tell about the expansion of capacity. With the planned capacity increase for the rest of this year they should end the year with an annual production capacity of $35 million with a gross margin of 40%.

My estimate for 2006 revenue and earnings are $26 million and EPS of 0.06. This will increase very significant in 2007 and 2008 due to further capacity increases and economy of scale.  

I expect NRTZ to earn 0.25 in 2007 and around $1 in 2008. This earnings forecast is obviously depending on the expansion of capacity. EPS of $1 would require revenue of around $150 million. A quite significant increase from the 35 million capacity by the end of this year but not unrealistic. The company expect to have capacity in place by October 2007 to generate 58 million in revenue annually:


Stabilized Rice Bran



Fiber



A 300% increase in capacity from 2007 to 2008 might seem ambitious but it is not unrealistic compared to their execution till date.



With 14.7 million in cash and no debt NRTZ has a very strong balance sheet. Combine this with a positive cash flow and the company should be able to finance part of the expansion through loans. The management is negotiating with several large partners who have expressed their willingness to finance new factories in order to secure the supply. The management does therefore not expect to have to issue additional shares to finance the build out the capacity.  (always nice to know when we talk pennies!)

Talk is cheap so is the management walking the talking? Well based on the insider buying it seems like the management believes in the company. They have been buying shares all the way up to $1.2!



So how to trade the stock?

Technicals  

At the last earnings call UBS' main question was: Why is the potential of the business not reflected in the stock price? Very good question and the answer was a combination of lack of awareness, too small market cap and the OTC status. Well for me that sounds like a good investment opportunity!



As can be seen the stock has already had a nice run. There were some profit taking on Friday after it crossed 1.35 (the company has issued more than 10 million warrants at 1.35.so you would expect some resistance here.

We do however have strong support at 1.2, which happens to be just around the price insiders bought for in August.

Short term I would expect the stock to consolidate between 1.2 and 1.35. Long term I could see this stock much higher!

Trading Plan:
Buy NTRZ.OB today.

.

[stocky]

Goodwork RAM, you are firing on all cylinders.

[Terliso]

Tomorrow let's bring NTRZ to the moon;)

Symmetrical breakout less than 3 bucks in play

[eggman11]

They have at total of 30,000,000 that are waiting to exercised almost equal to half the outstanding shares. The 10,000,000 in warrants that were previously mentioned plus They issues 17,560 shares of Covertable class C stock that can be converted into 1,000 each of the common stock 17,560 x 1,000 = 17,560,000 shares plus another 500,000 went to advisor of the deal. Very Dilutive

http://biz.yahoo.com/e/060515/ntrz.ob8-k.html

[setravis]

I have a thread on RICX.OB which had a merger with NTRZ.OB
Go Here......  http://www.3stocksonfire.org/trading/index.php?topic=1381.0

Strong indications of market ability of their rice bran products.
NutraCea has unlimited potential to become a ground-floor power in the rice bran-based nutraceuticals marketplace, with their patented bran stabilization technology, and their products and their supply chain initiatives. 2006 will tell what their long termfuture should be.

The potential for rice bran as a major raw nutritional product, and the food products that can be made from it is very exciting. NTRZ could become the hub of a world industry movement, worth billions to those who got in early. No guarantees, but lots of opportunity with low financial risk at at this point. USDA thinks that rice bran is a nutritionally superior commodity that has not yet come into its own. So do I. What do you think?

What volume! Could this be institutional buying? I was skeptical of their story in the beginning, but they may be up to something now. The coming quarters will tell the truth. We need to see sales, i mean accelerating sales in double digits.

Looks like we have a very nice looking ,
Cup with Handle (continuation) pattern, "Breakout here" !!!

The Cup with Handle is a bullish continuation pattern that marks a consolidation period followed by a breakout. It was developed by William O'Neil and introduced in his 1988 book, How to Make Money in Stocks.

As its name implies, there are two parts to the pattern: the cup and the handle. The cup forms after an advance and looks like a bowl or rounding bottom. As the cup is completed, a trading range develops on the right hand side and the handle is formed. A subsequent breakout from the handle's trading range signals a continuation of the prior advance.

As with most chart patterns, it is more important to capture the essence of the pattern than the particulars. The cup is a bowl-shaped consolidation and the handle is a short pullback followed by a breakout with expanding volume. A cup retracement of 62% may not fit the pattern requirements, but a particular stock's pattern may still capture the essence of the Cup with Handle.
More info,go here....   http://www.3stocksonfire.org/trading/index.php?topic=5933.0


Support @ $1.45...1.35...1.23

52wk Range: 0.60 - 1.65
Volume: 2,245,963
Avg Vol (3m): 476,074

Technicals
Record Price High
MACDis Bullish

Last Price Quote is:
15.23%above 13-day MA
31.58%above 50-day MA
RS Rating: N/A 

Fundamentals
Key Data:
Market Cap (M): $88.59 
P/E Ratio: NA 
PEG Ratio: N/A 
Next Earnings: 11/13/2006
Last Analyst Rating: N/A

[setravis]

Also the Thread on the
Penny Stock Picking Board
Go here......   http://www.3stocksonfire.org/trading/index.php?topic=1352.15

[Se7en]

NutraCea to Educate Industry at Expo East That Rice Bran Ranks Highest in Antioxidants Over 28 Foods Tested
Saturday October 7, 8:00 am ET

EL DORADO HILLS, Calif., Oct. 5 /PRNewswire-FirstCall/ -- NutraCea (OTC Bulletin Board: NTRZ - News) announced today that this week at the Expo East trade show they will educate attendees, which include industry insiders in the natural foods and products industry, about the antioxidant properties of rice bran. These antioxidant properties were established in a 2004 comprehensive study documenting the comparative values of lipophilic (fat soluble) and hydrophilic (water soluble) antioxidants found in a cross section of 28 foods commonly consumed in the United States in comparison to rice bran, which ranked the highest in the study.


"Over 120 antioxidants and cofactors have been identified in rice bran so far. These include gamma oryzanol and its 20 components, the tocopherols and the tocotrienols, which exist in 10 different forms, polyphenols, 21 different phytosterols, carotenoids, phospholipids, polysaccharides, amino acids, B vitamins and enzymes like glutathione peroxidase and metal chelators," said Dr. Rani Patel, Chief Science Officer of NutraCea.

"Rice Bran is thus a repository of potent antioxidants that nature has provided to ensure the health of the germ in the rice grain. The incredible properties of stabilized rice bran become more apparent with every study published and set the bar even higher for the functional food industry; stabilized rice bran has created a new realm of neutraceutical and physiological benefits that no other food can even approach. With a unique blend of carbohydrates, along with all the essential amino acids for protein metabolism, rice bran as a food or in the form of a dietary supplement offers the perfect solution in the ongoing battle against chronic disease and the many health issues that face our nation today," said Margie Adelman, Senior Vice President of NutraCea.

A study published in the Journal of Food Composition and Analysis.17 (2004) 407-22 reported that rice bran was used as a comparison to other foods and "extremely high lipophilic to hydrophilic ORAC value." It also has the highest lipophilic ORAC value 155 micromoles TE/gram or 27 times that of its closest competitor, which at that time was blueberries, which have 5.5 micromoles/gram. ORAC values refer to Oxygen Radical Absorbancy Capacity of food. "The astounding result of this study coupled with the soluble and insoluble fiber content completely validates an earlier study by Qureshi et al that rice bran either as a food or as a supplement leads to a reduction in cholesterol and thus lowers cardiovascular disease risk and may help in the management of controlling blood glucose levels," Patel added.

"The results of this study put rice bran at the top of the antioxidant charts," said Margie Adelman, Senior Vice President of NutraCea. "To be able to turn rice bran, which up to now has been discarded after processing rice, into a highly nutritious human nutrition supplement using our stabilization technology is not only a major achievement, but has tremendous possibilities for human health on a global level."

This study documented the lipophilic and hydrophilic ORAC value of 28 fruits, vegetable and nuts that are commonly consumed in the US for their antioxidant constituents and properties. The astonishing results of the study reported that rice bran contained the highest percent of lipophylic to total antioxidant capacity as compared to avocado (63.7% vs. 28.6%). This same study reported that the hydrophilic (water soluble) ORAC values for stabilized rice bran were second only to pecans.

Margie Adelman further Stated, "The antioxidant properties of rice bran have important biological significance, as fat-soluble antioxidants can stay longer in the human body than water-soluble antioxidants that get excreted from our body. Move over blueberries, raspberries strawberries, and plums; there's a new champion in town."



http://biz.yahoo.com/prnews/061007/sfth003.html?.v=64

[Ramsburg]

Update:
News:
- NutraCea to Educate Industry at Expo East That Rice Bran Ranks Highest in Antioxidants Over 28 Foods Tested

Friday was a volatile session for NTRZ with an indecision candle, although the stock managed to close positive and showing signs of strength. Probably we need some consolidation after the recent breakout, lets wait.

Trading Plan:
Hold NTRZ.OB
(We'll not be setting an automatic stop, although the suggested stop price would be near $1.32)

Regards,

[nicknite20]

Mike,
The past week has been extremely fruitful to say the least
But the strong price action has been extremely encouraging.

I want to add more, but i always seem to be chasing..

Do you know by any chance when they report Q3?
Also, would you venture a medium term (9-12 month) price target?

Thanks a lot,
Nick

[setravis]

Spreading the Bran......
The story is spreading east via the Expo East Trade Show.

52wk Range: 0.60 - 1.65
Volume: 3,241,782
Avg Vol (3m): 494,408

Technicals
MACD is Bullish
Stochastic is Bullish
Record Price High
Most Actives

Last Price Quote is:
22.33%above 13-day EMA
41.47%above 50-day EMA
RS Rating: N/A 

Fundamentals
Key Data:
Market Cap (M): $88.59 
P/E Ratio: NA 
PEG Ratio: N/A 
Next Earnings: 11/13/2006
Last Analyst Rating: N/A

Support @ $1.56...1.45...1.35
Resistance @ $1.81...2.00...2.25...2.50

Below are the 6month and 3 year charts......

[setravis]

Sorry,I will have to keep name of this writer under wraps....

Attended East Coast Natural Food Products Show on 10/7/06 (Baltimore)

I went (today (Saturday, 10/7/06), I saw, I liked. The Natural Products Expo East was a huge natural product provider's candy store designed for retailers to survey, and touch and taste almost everything edible. NutraCea was well represented, and had a prominent end-of-aisle double-sided display at a principal aisle, complete with revolving masthead sign. I discussed the science and the market potential with Dr. Patel (Chief Science Officer) and discussed the recent stock market performance with Kody Newland (Sr. V.P. of Sales). He was a happy camper after Friday's market performance. I also spoke with a staff sales guy (former Pfizer employee) when I first arrived at the display, who introduced me to Dr. Patel. She, in turn, introduced me to Kody Newland. Everyone was very friendly, helpful, informative, and comfortable. NutraCea had provided CD's, samples, cookbooks, flyer's, etc., to give out. I discussed at length the science, and the nutritional benefits of the products, as well as the world-wide applications, especially with lesser-developed nations (volume, vs margin). Their booth was active. I tried the rice solubles product. Without adding water the powder was very tasty in its raw form, and literally melts in your mouth. By the way, I learned that they have no interest in squeezing oil from rice bran, themselves. Apparently the oil is extracted from un-stabilized rice bran, per Dr. Patel.
I am now even more convinced that the company will prosper sooner than later. They will need to show income, new market penetrations, solid management, etc., but there is a great future in owning NTRZ stock, IMHO.

On the show itself, they were showing, an giving out individual samples and retail-sized containers of every natural and/or organic product, vitamin, juice, energy drink, cake, pie, candy, vegetable, meat product (ostrich, included), pasta, etc., under the sun. they were cooking stuff everywhere. There was too much to see or eat in the few hours that I could spend. I would not have gotten in without a friend's authorized retailer's badge. This show was "strictly" for the trade, which included large and small entities. And, It was very well attended.

Go Long, Stay Strong.

[nicknite20]

Thank you..thats really useful information. Wish i could have attended myself as well.
Nick

[joet]

KUDOS to Setravis, Thank you for the post, and taking the time to go to the show.  I like NTRZ but will probably be swing trading it on this great chart as apposed to investing...

How did they compare with other companies for attention getting?  Any other good stock buy ideas come from the show? Everyone needs to eat and North America is going Natural, organic etc...

Did you happen to notice if SWTS was there?  A natural energy drink company that i have traded, and like their product, sinc it was on th PKs now OTC.

Cheers Joe

[Ramsburg]

Update:
Excellent price and volume development during the last few sessions... NTRZ is proving a great strength keeping this trend up and running

There's a resistance at $1.80, NTRZ has the potential to fly across this barrier and go to much higher ground, and comparing the 2005's volume during the big speculative rally we can easily see a difference... This move has some different backup
Just as a security measure, and to take some profits out of the table, we are going to sell half of this position near $1.80.

Trading Plan:
SELL half of this position near $1.80 and Hold the rest.
(We'll not be setting an automatic stop, although the suggested stop price would be near $1.32)

Regards,

[nicknite20]

does any1 know when they report Q3 earnings?