Steady Return Stock - RTK

In the previous article, we introduced the investment strategy of finding the stock with low risk and steady return. Today let's take a look another one.

The Steady Return Stock we spotted today is Rentech, Inc. (RTK), the Denver, Colorado based alternative fuel technology company. The stock seems to be catching investors' attention again especially after Jim Crammer was bullish on the company on his Mad Money show saying the company's coal to oil technology is the right solution at the time for alternative energy. In addition the one year chart shows why we think the stock will continue to do well with limited risk:

• first of all both 50 day and 200 day moving average have been going up since September of 2005. Although 50 day moving average have weakened a bit in April, it seems to be going up again slightly.
• secondly both 50 day and 200 day moving average are going at similar angle since last October. Although 50 day moving average turned south a bit in April, it is back in the same angle as 200 day moving average again.
• although the stock has been up and down around 50 day moving average this year it still stayed relatve close to the 50 day moving average about plus or minus $1 away from the moving average. Now as the stock has rose again from 50 day moving average this is probably a good time to buy.

Since both 50 day and 200 day moving averages are going up at the same angel around mid October of last year, the stock has gained about 100% from $2.5 per share to $5.07 per share today.

The financial statement is a little bit weak as the company has generated less revenue and but steeper net loss for 2005. In order to maintain a healthy cash level the company sold stock worth 29 million for 2005.

Steady Return Stock Rating(1 ~ 5, 5 means highest):
1. Market Potential (Alternative Energy): 5
2. Technical: 4
3. Financial: 2
Overall Rating: B