today's carnage presents a sweet opportunity for shorts to close out their posiiotns before tomorrow's earnings release. The shares are near their 52 weelk low and could jump 20% on better than expected results. it is just too risky to stay short going into an earnings event.
As a long term investor in the NVG space, including a small position in FSYS, you've done a service by helping price to a more reasonable entry point, and possibly by help setting a long term double bottom.
Our view on the 3Q12 is it is as expected, though disappointed, as we do not see the cost savings effort coming fast enough.
But growth in the industrial segment has been weak, and this was been known since $CMI and $WPRT preannounced. Weakness in the markets of LA and Asia has also been know, much driven by the weakness in their EU export businesses, but green shoots are again being seen in LA and Asia economies. And yes, the weak euro of the 3Q12 was also known, but our view is that while the issues over their are not over, and we are back on a swing lower, we beleive the low for the euro is in for the year, that the EU has actually turned the corner as they now have a plan on how to deal with their issues, and that the 2013 euro/$ low will be higher than the 2012 low.
$FSYS is levered to the DOEM market in Europe, and that has been a real drag over the last few quarter, not just due to the broader economic pace of the EU, but over the loss of the govt incentives. And while NGV govt incentives may never return to the level they were previous, they are now fully out of the comps.
Also note that fracking in the shale plays across Europe has only starting to pay dividends in terms of lower prices of CNG. While the French have a ban on fracking, the UK just lifted theirs, and Poland is going great guns. Russia's Gazprom exports at prices that are still far above over spot, but are falling quickly as they also are fracking and their supplies are rising.
So while much hype has been knocked out of the NGV market, will still see a bright future. But must stress... this is for the long term view.
We remain long with our small core, which we are considering to increase, as well as to reload our trading tranche.