(By Street Authority) As Aesop once noted, patience is a virtue, and to wait will never hurt you. I had to remind myself of that as a stock I once planned to put in my $100,000 Real-Money Portfolio ran away from me.
In early January, I laid out the investment case behind carbon-fiber maker Zoltek (Nasdaq: ZOLT), which you can read about here. At the time, shares traded below $8, but they moved up nearly 8% by the time my self-induced 48-hour buying embargo had been lifted (this gives you a chance to get in on the trade ahead of me). Frankly, my decision to hold off buying at that time caused some distress. Just a few weeks later, shares soared to $13 on the heels of a solid quarterly report, which I discussed here.
At that point, I could only wait and see if shares returned to levels where I consider them to have solid downside support. Well, my patience paid off, and I've gotten a second chance to add this stock to my portfolio.
From risk-on to risk-off
That bipolar stock chart has more to do with investors' current mood right now, and not what is happening at this company. At the start of the year, investors were flocking to companies like Zoltek that had robust growth prospects. This was known as a "risk-on" environment, as investors actually sought out riskier stocks. These days, they are in a different mood. Companies with a strong set of growth prospects are being shunned if they aren't delivering the goods right now. So this company, which delivered a great fourth quarter but merely a good first quarter, is now being seen in a very different light.
Here's what I wrote back in January: "Zoltek looks to be moderately profitable in fiscal (September) 2012, perhaps earning around $0.25 a share.