WAITING FOR A 10% DROP AND WASH OUT TO ADD TO POSITIONS.
I believe that we are near a bottom but need one more (1-2 day) wash out as the last of the longs throw in the towel. The company has had a bit of bad press recently with companies reporting less fuel efficiency than expected. The company already set aside 20-30 million for warranty expense to cover many of these issues. This is new technology and it will take some time to work out the bugs. The lower fuel efficiency had pushed out the payback period from an expected 18 months toward 4 years. As these bugs are fixed and companies build up their experience the payback period will quickly fall toward the 2 year level. (where else can you get a 50% return on investment). The price gap between Nat Gas and diesel are too large to ignore. These well publicised events have driven the price of the stock well below long term prospects for this company. If you believe that they won't be able to solve issues or the industry will never take off because of a few sputters in the roll out of a new engine then you should sell or short. If on the other hand you believe that they will work through these issues and the economics of lower prices will lead this to 10% or more market share in the next few years then you can see that this may soon be in for a multi year run which would be nearly a 5 fold return by just returning to levels seen in the past 3 years or so.
(holding but not adding until we see a wash out)
RWC didn't get the Portland replacement contract but they may still get an order on the 9.5mm contract announced last October. This may be the break out year for RWC.
Shocking, Shocking .......new technology has some minor bugs. Wprt a year from now will look like boeing today compared to boeing last January.
WPRT is down more than 50% from last years high and about 70% from two years ago. WPRT is no longer a concept company with a product in the future but a company with products here and now. Funds will need to add this company to their portfolio if for no other reason as a risk management tool. This stock will have inverse market movements with the rest of the market when the market is hit with adverse risks from oil price shocks. Fleets will be better able to hedge their risks from oil price shocks by moving a portion of their fleet to natural gas. Once again , a few years ago this was only concept and today it is fact. You can bet that fleet managers are today reviewing their fleet needs with the idea of reducing risk. The market if falling because of the Putin push into the Ukraine. Oil prices are again rising (up nearly $2.00). Wprt is down this morning but CLNE is up and wprt has been rising the last 45 minutes as the rest of the market continues to decline. Portfolio managers can own oil or gas companies which will have some uncorrelated moves with the rest of the market but if they really want to hedge their positions they need a company which will have significant upside movements. WPRT sales (CWI) would only need a small industry uptake in NG trucks to move the earnings into positive territory. Currently they are only expecting about 3% market penetration with NG engines. A move to 4-6% will change the dynamics of WPRT very quickly.
I expected poor results last week and only had a small initial position. I am now taking the sell off to take advantage of the market opportunity and build a substantial position at this time. In the next few weeks portfolio managers will see the need to add this company to their portfolios. If oil drifts back then their oil investments will also retreat whereas WPRT will continue with its momentum.
If you assume all 1470 unit increase was 12l is that enough to get this stock going. I thought that the CLNE call sometime back was calling for 20000 units annual. I know there will be a ramp but am disappointed that management didn't give specific numbers for the new engine. We have to guess what is growth in older lower horse power units and the growth in the new models.
If they were really good numbers you can bet that management would be posting them all day long but I see nothing in the press release.
Buy on the dip (my guess 10% drop).
small long position if I am wrong. I expect to build a much larger position if it sells off. This company has traded lower in the past few months. You can bet that hedge funds have contacts in the plants that produce their products and they have day to day indications of production levels. The stock price is indicating that the growth spurt that is needed to move this company toward profitability will not be delivered this quarter. I believe that this is just a slow start for long run growth but the market will provide additional opportunities to lower my average price.
My estimate for the 4th quarter is 7.75-8mm in revenue and 4-5 cents in earnings.
The company has been getting some wins in the past few months 1.6mm but needs to get some larger orders to push the stock higher. I am looking for a several million order from the wins announced last year (9.5mm) but only a few thousand amount was delivered for testing. If you assume that about 50% of this contract would be filled over the next 2 years then you could expect about 2mm a year. Last year the Forest service placed a large order in the first quarter verses the second quarter in prior years. Considering the fire risk this year I would expect another large order sooner than later. The city of Portland is still in play. Five companies submitted bids in January and the City is currently evaluating the proposals.
Relm is one of my larger holdings and my projection is for a 20% revenue gain this year with a much larger gain in earnings. If you didn't see the investor presentation earlier this year, I suggest you take the time to review the presentation from the corporate web page.
I have been adding on this sell off.
3.6mm shares are seriously underwater from just a few days ago. Im having trouble trying to figure this stock action. 1) trades one of the largest percentage of float 5-10% daily. Why so many buyers,sellers, traders in this stock?
2) I couldn't make heads or tails out of the earnings statement. The stock quickly dropped 5% then ran nearly 50% in a few hours. Why? I belive that there is value in this stock but the volatility (for a value stock) is just too high for me to get invioved.
I expect Relm to have sales of 36mm this year up from about 29mm in 2013. RWC needs about 5.5mm a quarter or 22mm in sales to break even. Beyond that they move about 2.5 cents to the bottom line for each million in additional sales. My projection for 2014 is 36mm in sales 14mm above the B/E and 14*2.5 or about 35 cents in earnings. 18 p/e gives a price target of $6.30
EBIDTA shouldn't include stock based compensation which is the 28-34mm number they indicated. I subtracted 8mm for the stock (3q conference call indicated about 2mm a quarter) for 20-26mm.
READ THE FINANCIALS. no debt ....total liabilities 105mm cash 68mm
ebidta should be about 20-26mm this year.
stock is trading at fair value at about 6-7x EBIDTA
The question is when will they return to growth?
How much will EBIDTA change next year as the company cuts costs. They indicated that they expect to cut about 8mm by end of year (back end loaded).
PS who would have thought it would cost so much to split up a company?
Revenue in 1212 was north of 100mm and mgt guided to a 10 % rise in revenues for the year. 2013 was down 20% not up 10%. The only thing that keeps me in this stock is that the company has kept costs in line and they do not seem top heavy and the bottom line keeps coming in near break even. My hope is that sales eventually rise and the company can maintain the lower cost basis. We need some assurance that we are at a bottom and that sales will increase and not disappoint again in 2014.
NO INFO GIVEN. EF Johnson was taken over by a hedge fund a few years ago, so public info is not available. Annual sales were about 125mm.