Get 40% Off
💰 Buffett reveals a $6.7B stake in Chubb. Copy the full portfolio for FREE with InvestingPro’s Stock Ideas toolCopy Portfolios

Cosan's (CZZ) Long-Term Potential Solid, Risks Remain

Published 05/19/2016, 10:10 PM
Updated 07/09/2023, 06:31 AM
IOSP
-
USAP
-
CZZ
-
PKX
-

We issued an updated research report on Cosan Limited (NYSE:CZZ) on May 20, 2016. The company is engaged in the cultivation, harvesting and processing of sugarcane, which is the main raw material used for producing sugar and ethanol.

Cosan is the world’s largest producer and processor of sugarcane, having crushed approximately 63 million tons of sugarcane during the Apr 2015−Mar 2016 period. The company constantly strives to improve its production capabilities and services, and its organic and inorganic growth initiatives have yielded results over time.

Notwithstanding these positives, Cosan’s exposure to certain headwinds has been restricting its momentum in the near term. The company’s international operations face risks from geo-political issues and foreign exchange variations. Also, unfavorable weather conditions and stiff competition can adversely impact the company’s profitability.

Mounting operating costs and interest expenses remain a major concern for Cosan. In first-quarter 2016, the company’s cost of sales increased 30% year over year while its operating expenses grew 18%. To add to the woes, the company is exposed to volatility in domestic and international supply and demand given the high cyclicality of the industry.

With a market capitalization of $1.5 billion, Cosan currently carries a Zacks Rank #3 (Hold). The ranking is justified as near-term concerns surrounding the stock seem to offset the promise of bright prospects. Some better-ranked stocks in the sector include Innospec Inc. (NASDAQ:IOSP) , POSCO (NYSE:PKX) and Universal Stainless & Alloy Products Inc. (NASDAQ:USAP) . While Innospec Inc. sports a Zacks Rank #1 (Strong Buy), both POSCO and Universal Stainless & Alloy Products carry a Zacks Rank #2 (Buy).


INNOSPEC INC (IOSP): Free Stock Analysis Report

POSCO-ADR (PKX): Free Stock Analysis Report

UNVL STAINLESS (USAP): Free Stock Analysis Report

COSAN LTD-A (CZZ): Free Stock Analysis Report

Original post

Zacks Investment Research

3rd party Ad. Not an offer or recommendation by Investing.com. See disclosure here or remove ads .

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.