The price and volume action of Capstone Turbine (CPST) shares on Friday make CPST a stock to watch as we open the new trading week.
A late day surge pushed CPST 10% higher on volume, more than double the normal average, leaving investors wondering what might be in store during the coming days that might justify such a rise.
Was it the political turmoil and instability in the Middle East that sparked the sudden interest in Capstone? Could be, since this 'green' stock and others like it tend to do very well during times of rising oil prices.
It's also possible that some significant news slipped behind the scenes on Friday afternoon, because the late day action sure looks like somebody knew something that we didn't.
Perhaps it was just a case of a big player becoming interested in the long term potential and viability of the company, certainly a possibility given the growing popularity of Capstone's low-emission microturbine units.
The true cause of the spike may never reveal itself, but it makes the short term Capstone story that much more interesting to watch.
That said, with all the good news and even better price action of this stock (CPST traded for three quarters of a dollar just three months ago), it might also be worth keeping an eye on the increasing short interest.
Month-over-month, short interest in CPST grew by roughly six million shares from January to February. This could be an indication that the short sellers may be looking to take advantage of a pullback after Capstone's impressive three month run, although in a similar situation with SIRI shares late last year, short interest was also increasing when that stock hit the $1 mark, and that stock hasn't looked back since while approaching two dollars.
So the short interest could end up becoming a non-factor, as even the shorts can get it wrong sometimes.
Regardless, I wouldn't rule out another dip in the CPST share price back down towards a buck at some point in time, but the news has been encouraging for this company of late, and Friday's price action reminds us that there's always the potential for Capstone to release big news at any given time to propel the share price higher.
I'm always a fan of taking some money off the table during significant runups, and I'd say that the runup from sub-eighty cents in short time is pretty significant, but it's also worth recognizing the long term potential that Capstone holds - especially when oil prices could be on the brink of setting new records, and the world's attention will flock to the 'green' companies, such as Capstone.
Additionally, with the uncertainty and upredictability surrounding the oil market right now, I wouldn't be surprised to see an Exxon (XOM) or a Chevron (CVX) come out of the woodwork and snatch up as many of the emerging 'green' companies that they can in order to stay ahead of the game.
After all, oil can only get so expensive before the average consumer simply cannot afford to buy in large quantities, and going green can keep 'big oil' ahead of the game - even without relying solely on the oil.