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Fuel Systems Solutions, Inc. Message Board

  • buyacramer buyacramer Jan 26, 2013 2:45 PM Flag

    FSYS is at mult-year lows while markets are at all time highs?

    The market is at an all time high while FSYS is near a multi-year low. Hard to understand why FSYS stock is getting crushed, which implies FSYS will not benefit from the strengthening global economy.

    Here are reasons why I don't think it makes sense that FSYS is trading near multi-year lows while global markets and economies are rallying:

    1) Global Economic Strength: Economic growth is really picking up steam as recent economic reports from US and China (world's largest economies) show. Stock markets around the world are acknowledging this as many are at multi-year highs.
    2) Growth Industry: FSYS is in a great space. Natural gas will continue to grow in importance as an energy source. The demand for products that FSYS makes will continue to drastically grow.
    3) Valuation: For being is such a hot growth industry and with leading products, FSYS is definitely not trading at any type of premium. It is one of the only profitable companies in this growing industry and it trades at like half of 2013 revenue and less than book value. Looking at the financial fundamentals, FSYS looks more like a mature company in a declining industry.
    4) High Oil Prices: Oil is again rallying and is getting close to all time highs while nat gas is just hoovering slightly above all-time lows. This will no doubt spark further nat gas debates and potentially political policy change that could really alter the future of FSYS.
    5) Currency benefit: Now that the sky isn't falling, money is moving back into international markets causing USD to depreciate. Euro has risen against the USD by 5-7% in the last couple of weeks as Europe crisis worries subside. USD should continue to fall on QE3 money printing and as world economies strengthen. This means that you should see a nice currenty benefit on revenues, earnings, and value of assets overseas.

    In summary, it just doesn't make sense for FSYS to be tanking while economies and markets are soaring. FSYS is well positioned and will significantly benefit from these improving macro trends, contrary to what the stock price performance currently suggests.

    Sentiment: Strong Buy

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