Lockheed Martin (LMT) Announces Joint Venture with Ocean Power (OPTT)

• Ian Wyatt
• On 4:35 pm EDT, Tuesday October 13, 2009

Yesterday, after Energy Conversion Devices (Nasdaq:ENER) put in a solid 15% move, I suggested that we put solar stocks on our radar. I should have thrown a wider net, though. There are no solar stocks on the Top Daily Gainers list today. But there were several alternative energy stocks making large moves.

BioFuel Energy (NasdaqGM:BIOF - News) was up 18% and Clean Diesel Technologies (Nasdaq:CDTI) was up 15%. But by far the big winner was Ocean Power Technologies (NasdaqGM:OPTT - News). Ocean Power shares were up as much as 85% after it announced a joint venture with Lockheed Martin (NYSE:LMT) to develop its PowerBuoy for utility-scale power generation.

If you haven't read about this technology, it's pretty neat stuff. The buoys contain hydraulics that are moved by ocean waves to create electricity that's transferred by power cable to shore. The company claims it can build a 10 megawatt power station that would cover 30 acres of ocean and provide power for 4,000 homes. And the company believes they can create a 100 megawatt power station by adding more buoys.

The prototype of the buoys are 48 feet long, but only 14 feet is visible above the surface. No doubt these things are expensive, and the final versions may be even bigger. They are currently being tested off the shore of Atlantic City, New Jersey, in Hawaii and Spain. Another will be launched in Scotland later this year.

The deal with Lockheed is certainly good news as it demonstrates that the technology is viable. We can assume that Lockheed will help with financing, but still, it's going to be a while before the Ocean Power is making sales and bringing in revenue. The company also has testing deals with the U.S. Navy, and has signed an agreement to provide equipment for a power station in Japan.

After today's move, Ocean Power has a market cap of around $120 million. It declares $3.5 million in revenue, but it does have $50 million in cash and almost no debt. That's important because it will likely be a couple years before it's making any sales.

As for the other two alternative energy companies, BioFuel Energy is an ethanol company that's up because it announced that it's debt has been restructured. That will buy it some time, but the fundamentals for ethanol companies are terrible because you just can't get enough power out of corn to make it economical.

And Clean Diesel Technologies makes filters, additives and other technologies to reduce the emissions from engines. It's being threatened by the Nasdaq with de-listing, so it's a no-go.

Tri-Valley (AMEX:TIV - News) made the Top Daily Loser list with a 13% drop. That move takes it right to support at $3. There's another support line at $2.50. I'd expect to see a bounce from one of those levels.

Buzz up!