Ormat Industries Ltd. subsidiary Ormat Technologies Inc. (NYSE: ORA) is unquestionably one of the most highly recommended Israeli companies, as it combines excellent management with an extraordinary product. The company’s share skyrocketed in February, reaching almost $44, only to fall back to $31 by mid-June. Now, with the backing of recommendations and actual performance, as well as a trend of investment in alternative energies to oil, the shares seem poised to climb again.
Ormat Technologies indisputably a long-term investment, because it’s really hard to see a crisis in its business over the foreseeable future. It is a leader in the niche geothermal electricity market. The company’s expertise is not only in exploiting geothermal energy to generate electricity, but also in building geothermal power plants. It turns out that success also generates international recognition, and with oil prices staying at high levels, Ormat Technologies is thriving on Main Street. Wall Street is another matter, but we’ll see an upswing in the future there too.
I’m afraid that some analysts are taking a crisis in renewable energy next year into account. I foresee no such crisis. Ormat Technologies is certainly exceptional as far as numbers are concerned. The company’s sales rose from $119 million in 2003 to $238 million in 2005, and will probably reach $270 million this year. The company’s net profit rose from $15 million in 2003 to $38 million this year.
The problem with forecasts for Ormat Technologies is that they are based on what exists now, and do not fit reality in this case. This is for the simple reason that the company’s business - geothermal electricity production - is growing, and I believe that Ormat Technologies will be the industry leader, so any number given today must take into account the expected growth in the sector, as well as the capabilities of the Yavne-based company.
Ladies and gentlemen, this is a share that ought to be in your portfolios for the long haul. Incidentally, parent company Ormat Industries, together with Gazit-Globe Ltd. will join the Tel Aviv 25 index next week.
Published by Globes [online], Israel business news - www.globes.co.il - on June 28, 2006
© Copyright of Globes Publisher Itonut (1983) Ltd. 2006. Republished on Seeking Alpha with full permission.