Several years ago, renewable energy was one of the hottest sectors in the market. The companies in that niche seemed to be trading at higher highs every week. Eventually the action cooled off and share prices returned to normal valuations. But over the past few months it appears that investor enthusiasm for these stocks is back. One stock that appears poised for significant growth is ForceField Energy (FNRG). Below are 3 reasons why investors should consider investing in the company.
ForceField Energy primarily operates in two distinct segments of renewable energy; LED lighting and waste heat recovery through its majority ownership of TransPacific Energy ("TPE"), a U.S.-based renewable energy provider that uses "waste heat" from various manufacturing and other sources to provide clean electricity. These are among the fastest growing areas of the worldwide renewable energy market with the total expected market to hit $500 billion by 2017.
Reason #1 - Recent Technical Strength
ForceField Energy has taken off in the past month as investors appear to have a better understanding of the company's business and prospects. Over the past 30 days, shares of the company are up approximately 8%. The chart below shows the nice move that investors have enjoyed.
(Click to enlarge)
In comparison, investors can look at the SPDR S&P 500 ETF Trust to see how the broader market has performed. Over the same 30 day period, the overall market is only up approximately 3% as shown by the chart below.
ForceField's chart appears to be headed even higher given that the new highs have come on high volume trading days. Although it can be risky to buy at a new high, given the potential that the company has, investors may not want to miss the opportunity.
Reason #2 - LED Market Opportunity
Another part of the company's business that should excite investors is the company's participation in the LED market. ForceField has the exclusive North American, Latin American, and European rights; and rest of world rights on a non-exclusive basis from a highly regarded LED manufacturer to distribute high-performance light emitting diode (LED) lighting fixtures used in many diverse applications. LED technology is expected to replace incandescent and fluorescent fixtures as it offers longer lifecycles, cost savings, and reduced energy consumption. LED technology is expected to have an even stronger impact in the current economic environment where companies are aggressively seeking reductions in operating costs. LED lends itself well to these initiatives as both an immediate and long-term solution.
The U.S. Department of Energy estimates that there are over 2.5 billion fixtures in commercial and industrial properties throughout the United States. The replacement cost of these fixtures and others worldwide could possibly excited one trillion dollars. Given ForceField's desirable position in this market, revenues could soar.
Reason #3 - NASDAQ Listing Offers Investors More Liquidity
On October 17th, ForceField Energy shares began trading on the NASDAQ. The listing should allow the company to gain more name recognition with traders and investors as the move provides greater liquidity and increased exposure to investment firms and money managers across the world. Given the company's position within the renewable energy space, it is likely that momentum traders could soon pile in and give retail investors a reason to celebrate.
Although it appears ForceField has an incredible amount of potential, investors should know that with all micro-cap companies, especially in a risky industry such as renewable energy, raising cash is always challenging. Based on the company's current balance sheet, relatively modest share count outstanding (16.3 million shares) and the company's demonstrated ability to raise capital on favorable terms ($6.0+ million over the past three years) with minimal dilution, it appears that ForceField Energy has the ability to fund its operation in 2014 and beyond. In order to fully achieve their business plan, it is possible that the company at some point may need to offer a secondary which could dilute existing investors. However, ForceField could also choose to get additional debt funding or project funding with minimal dilution. It is also possible that the company will be able to penetrate the LED market sooner than expected which could generate the cash necessary for the company to continue on without having to raise additional financing in any form.
ForceField appears to be in the right industry at the right time. With the world's focus turning to renewable energy, the potential that the company has is immense. LED lighting and clean electricity represent two of the fastest growing markets in the industry and it just so happens that ForceField is at the forefront of both. With the company's smart use of resources, the recent technical strength, the latest strategic transactions in various countries, and the massive market potential, it appears that ForceField Energy represents an excellent opportunity for investors.